1. Finance
  2. Liquidity & Solvency

Burn Rate

Money

The rate at which a company is spending its capital, especially important for startups or growth-focused companies. It helps investors and company executives determine how long the company can operate before needing additional funding.

Formula

Total Cash Spent Over a Period / Number of Months in that Period

Example

If a startup spent $300,000 over 3 months, its burn rate is $100,000/month.