Net Cash Burn
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)
| Include | Don’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 |
| Alias | Net Burn/Net Burn Rate/Cash Burn Rate |
| Abbreviation | NCB |
| Unit | Currency (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 € |