Burn-Rate

Definition:

Burn-rate refers to the amount of money a company spends from month to month (money burnt) in order to survive. Thus a burn-rate of $50,000 would mean the company spends $50,000 a month above any incoming cash flow to sustain its business. Entrepreneurial companies will calculate their burn-rate in order to understand how much time they have before they need to raise more money, or show a positive cash flow.

Related terms:

Free enterprise system

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