< Back to Glossary

Burn Rate

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.

Ebook
Revolutionize Your Accounting with Finanshels
Book Free Consultation
stars
Trustpilot
Bader Al Kazemiquote
"If you ever do any financial modeling/forecasting, I seriously can't recommend Finanshels enough. they are a dependable team of professionals who work hard to deliver results."
Bader Al Kazemi
Founder, Optimize App
Restaurants Accounting
The Restaurant Business An Accounting Guide

The Restaurant Business An Accounting Guide

Get Free Guide
Join our newsletter
From the best Financial Accounting Services provider in UAE
We care about your data in our privacy policy.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.