What Is The Importance Of A Burn Rate?

What Is The Importance Of A Burn Rate?

1 Answer

  1. Burn rate refers to the rate at which a company spends its supply of cash over time. It’s the rate of negative cash flow, usually quoted as a monthly rate.
    Its very important for a business to have a good burn rate and to know that what works for it to maintain it. Its a key indicator to determine the financial health of the company. It reflects whether or not the company will survive for long term.
    A start-up is often unable to generate a positive net income in its early stages as it is focused on growing its customer base and improving its product. As such, seed stage investors or venture capitalists often provide funding based on a company’s burn rate.

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