Reading the accounts
Cash burn
The rate at which a loss-making company is consuming its cash reserves.
How it works
Burn is usually quoted monthly or quarterly. It matters most alongside the cash balance, because together they give the runway.
A company burning cash is on a clock: it must reach profitability, raise more money, or be acquired before the cash runs out.
Related terms
- RunwayHow long a loss-making company can operate before it runs out of cash at the current burn rate.
- BreakevenThe level of sales at which revenue exactly covers costs and profit is zero.
- Free cash flowCash left over after paying for the investment needed to maintain and grow the business.
- DilutionThe reduction in your ownership share when a company issues new shares.
More in Reading the accounts
- Cash conversion cycle
- Capital expenditure
- Cash flow statement
- Cost of goods sold
- Book value
- Deferred revenue
- Balance sheet
- Depreciation and amortisation
All 51 Reading the accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.