burn rate investment & finance definition
A
measure of how quickly a company will exhaust its cash or available liquidity,
used frequently in the venture capital industry. Burn rate is calculated by
taking the total amount of cash on hand and dividing it by the monthly
expenditures to see how many months the company could stay in business. The
term was often used during the Internet boom
See burn rate in Wall Street Words
The speed with which a company consumes cash, generally stated on a monthly basis. A high burn rate indicates a firm will soon be out of business unless it can raise additional capital, dramatically increase cash sales, or reduce expenses. The burn rate was particularly high for dot-com companies that placed emphasis on capturing market share rather than profitability.
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