Burn Rate

Burn Rate
The rate at which a new company uses up its venture capital to finance overhead before generating positive cash flow from operations. In other words, it's a measure of negative cash flow.

Burn rate is usually quoted in terms of cash spent per month. For example, a burn rate of 1 million would mean the company is spending 1 million per month. When the burn rate begins to exceed forecasts, or revenue fails to meet expectations, the usual recourse is to reduce the burn rate (which, in most companies, means reducing staff).


Investment dictionary. . 2012.

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  • Burn rate — is a synonymous term for negative cash flow. It is a measure for how fast a company will use up its shareholder capital. If the shareholder capital is exhausted, the company will either have to start making a profit, find additional funding, or… …   Wikipedia

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  • Cash-Burn-Rate — Die Cash Burn Rate (deutsch etwa: Geldverbrennungsrate) bezeichnet 1.) die Geschwindigkeit, mit der die finanziellen Mittel aufgebraucht werden oder 2.) den Zeitraum, in dem die liquiden Mittel eines Unternehmens vollständig aufgebraucht werden.… …   Deutsch Wikipedia

  • cash burn rate — UK US noun [C] (also burn rate) ► FINANCE the speed at which a company spends the money that is available to it, when it is not making more money than it spends: »We are not concerned about our cash burn rate, we have £117m in the bank which is… …   Financial and business terms

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