Burn rate

The cash a loss-making company consumes each month. Gross burn is total monthly cash spending; net burn is that spending less the cash coming in, and net burn is the figure that sets how long the money lasts.

A start-up holding ₹180 crore that spends ₹18 crore a month and collects ₹6 crore has a net burn of ₹12 crore and a runway of 15 months. Raising money can take six months or more, so a company with 15 months of runway is already planning its next round, and you should read its spending decisions in that light.

Burn moves with working capital as well as with losses. If a business pays suppliers late or collects advances from customers, it can show a lower burn without becoming any more profitable, so read burn alongside the loss in the income statement and ask which one improved.

Runway is cash divided by net burn.