Definition

The Net Cash Burn KPI refers to the amount of money by which cash decreases in a set period.

Characteristics

  • Measures how quickly your business is spending money (net-negative cash flow)
  • If your Cash on Hand increases in a period your Net Cash Burn is negative (because you generate money)
IncludeDon’t include
Cash infolws (e.g. revenues) and cash outflows (e.g. costs)Unusual positive cash flows such as received investments

Calculation

CoH at beginning of period
– CoH at end of period
= Net Cash Burn

 

AliasNet Burn/Net Burn Rate/Cash Burn Rate
AbbreviationNCB
UnitCurrency (Euro / Dollar / YEN …)

Example

A company has started a month with 52.000 € COH at the end of the month it has 48.000 € left. Their Net Cash Burn is therefore calculated as follows:

+ 52.000 €
– 48.000 €
= 4.000 €