Net monthly cash burn and supporting figures
The tool averages operating cash movements over the entered period. Positive net burn means cash is being consumed; zero or negative net burn does not yield a finite exhaustion date under a constant-rate model.
To assess sales volume needed to cover fixed and variable costs, use the Break-Even Calculator as a separate cost-and-revenue calculation.
The formula
The tool averages operating cash movements over the entered period. Positive net burn means cash is being consumed; zero or negative net burn does not yield a finite exhaustion date under a constant-rate model.
Worked burn rate example
Outflows of 150,000 and inflows of 90,000 over three months give gross monthly burn of 50,000 and net monthly burn of 20,000. Available cash of 200,000 provides ten modeled months of runway.
How to use this calculator
- Enter operating cash outflows during period, operating cash inflows during period, reporting period length.
- Set current available operating cash using the stated units or choices.
- Calculate and compare net monthly cash burn, gross monthly cash burn, estimated cash runway, annualized net cash burn.
Choosing inputs for burn rate
Use cash paid and cash received rather than income-statement expenses and revenue. Accrual accounting can recognize sales before collection and expenses before payment. Borrowing and investment funding are not operating inflows in this calculation; mixing a financing round into sales receipts would hide the operating cash consumption you are trying to measure.
Gross burn describes average cash outflow before operating receipts are deducted. Net burn describes the remaining cash consumption after those receipts. A business can have substantial gross spending with low net burn when customers fund much of the outflow. If receipts exceed outflows, net burn is negative and the result identifies cash generation rather than inventing a negative exhaustion time.
Interpreting net monthly cash burn
Runway divides available operating cash by positive net burn, assuming future months repeat the observed average. It is a planning scenario rather than a cash forecast: seasonality, large upcoming payments, sales changes, financing, and minimum reserve requirements can move the actual date. Recalculate with representative periods and a usable cash balance rather than including restricted funds.
Assumptions & limitations
What this calculation assumes
- Entered movements are operating cash flows in one currency.
- The future net monthly burn is assumed constant for the runway estimate.
What to keep in mind
- Financing, restricted cash, seasonality, reserve floors, upcoming one-time payments, and future growth are excluded.
Common questions
What is the difference between gross and net burn?
Gross burn counts average operating cash outflows. Net burn subtracts average operating cash inflows.
What happens when net burn is zero or negative?
The result states that cash is stable or being generated under the entered average, rather than returning infinite or negative runway.
Should a funding round count as operating inflow?
No. Keep financing receipts separate when measuring operating burn; include only the operating receipts defined by your analysis.
Sources & further reading
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