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CMetrics & moneyUpdated 2 Nov 2026

Cash burn rate

Rate at which a company consumes its cash reserves over time.

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.

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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.

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