Burn rate is a term used to describe the rate at which a company is spending its cash reserves. It is typically calculated by dividing the company's monthly expenses by its cash balance.
For example, if a company has $100,000 in monthly expenses and a cash balance of $500,000, its burn rate would be 20% ($100,000 / $500,000).
Burn rate is an important metric for businesses because it can provide an indication of how long the company's cash reserves will last. It is often used by investors and analysts to evaluate the financial health of a company and to assess its potential for growth.
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