Cash Burn Rate
Definition
The rate at which a business, often a startup, spends its cash reserves before reaching profitability. Gross burn is total cash spent; net burn is spending less any cash coming in.
Related Terms in Financial Analysis
Cash Runway
How long a business can keep operating at its current net burn rate before it runs out of cash. It tells founders how much time they have to reach profitability or raise more funding.
Customer Lifetime Value (CLV)
The total profit a business expects to earn from a customer over the whole relationship. Comparing it to the cost of acquiring a customer shows whether growth spending is sustainable.
Customer Acquisition Cost (CAC)
The average cost of winning a new customer, including sales and marketing spend divided by the number of customers acquired. It is central to judging the efficiency of growth.
Churn Rate
The percentage of customers or recurring revenue lost over a period. Low churn is critical for subscription businesses, where retained customers compound into predictable revenue.
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