Verbull Word of the day
Finance glossary

Burn Rate

Corporate Finance · beginner
Definition

How fast a company spends its cash reserves.

Burn rate is the pace at which a startup consumes cash, usually measured monthly. Gross burn is total spending; net burn subtracts revenue. Investors watch it closely because, combined with cash on hand, it determines how long the company can survive before needing more funding.

In a sentence

With a $400,000 monthly burn rate, the startup needed fresh funding within a year.

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