Net Cash Burn

Definition

The net cash burn is the amount of money by which cash is decreasing in a reporting period.

Characteristics

-Measures how quickly your business is spending money     (net-negative cash flow)
-Includes any revenue that is generated by the company
-Can fluctuate from period to period depending on business   model
-Should always be a positive (absolute) value

Example

A company has started a month with 2000 € in the bank but at the end of the month has only 1000 € left. The burn rate for this month is 1000 €.

Negations / Exclusions

– Unusual positive cash flow such as an investment

Net Burn, Net Burn Rate, Cash Burn Rate

Currency
(Euro / Dollar / YEN …)

Calculation

Cash On Hand at beginning of period – (minus) Cash On Hand at the end of period

Cost Total

Cost Labour

Net Cash Burn

Cash on Hand

Head-count

Individual KPIs