Cash Burn Rate Calculator
The Cash Burn Rate Calculator will calculate your historical cash burn rate and your projected cash burn rate. Based on the cash burn rate, it will also tell you when you will run out of cash.
“Cash Burn Rate” is usually used to describe the rate at which a new company is spending its cash reserves (owner savings, venture capital or loan proceeds) to finance operating costs before generating cash inflows from sales. It’s a measure of negative cash flow or the use of cash reserves.
There are two common reasons why an established business has a negative monthly cash flow:
1. Cash is being depleted each month due to operating losses.
2. Cash is being depleted each month due to debt repayment or investments in inventory, equipment, new hires, etc.
The “burn rate” is usually quoted in terms of the amount of negative cash outflow per month. The “burn rate” is NOT your company’s operating loss in terms of profit and loss. Cash flow and profit-or-loss are not the same thing.
2 minute video with screen shots of the Cash Burn Rate Calculator.