Business
Burn Rate
The rate at which a startup or business spends its cash reserves, expressed as a monthly dollar amount. Net burn rate subtracts revenue from gross expenses. Determines how many months of 'runway' a company has.
Gross burn is total monthly spending; net burn subtracts revenue to show the real monthly cash drain. Dividing cash on hand by net burn gives runway — the months until a raise, profitability, or trouble.
Key Formula & Relationship
Cash Runway (Months) = Total Cash Reserves / Net Monthly Burn Rate
Reviewed by the Calculover Editorial Team for mathematical and practical accuracy.
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