Cash Burn Rate Calculator

Cash Burn Rate Formula

The formula to calculate the cash burn rate is:

\[ \text{Burn Rate} = \frac{\text{Initial Balance} - \text{Final Balance}}{\text{Duration}} \]

Description

The cash burn rate is a measure of how quickly a company is using up its cash reserves. It's important for startups and companies to manage their burn rate to ensure they don't run out of cash before becoming profitable.

Initial Balance: The amount of cash at the beginning of the period.
Final Balance: The amount of cash at the end of the period.
Duration: The time period over which the burn rate is calculated, typically in months.

Example Calculation

Let's assume the following:

Initial Balance: $1,000,000
Final Balance: $500,000
Duration: 10 months

To calculate the burn rate:

\[ \text{Burn Rate} = \frac{1,000,000 - 500,000}{10} = 50,000 \text{ per month} \]