Definition
Cash burn rate is how fast the company consumes cash after revenue. Gross burn is total cash out. Net burn is cash out minus cash in. Founders watch net burn because it is the number that shortens runway.
In the room
How the word shows up in a real conversation.
The company spends ₹18 lakh a month and collects ₹6 lakh. Net burn is ₹12 lakh. With ₹72 lakh in the bank, runway is about six months — unless burn changes.
Formula
Net burn = cash out − cash in · Runway ≈ cash ÷ net burn
Common mistake
Reporting only the bank balance. Balance without burn hides the date you run out.
India note
Count GST, founder drawings, and delayed receivables. A “profitable on paper” month can still burn cash if invoices are unpaid.
See also
Runway
How many months the company can operate before cash runs out at the current burn.
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Unit Economics
Financial analysis of the profitability of individual units or transactions.
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Gross Margin
Percentage of revenue remaining after deducting the cost of goods sold.
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Payback period
Time required for an investment to recover its initial cost through cash flows.
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