1. What is Burn Rate Percentage?

The burn rate percentage is a key financial metric that shows what percentage of a company's cash balance is being spent each month. It helps businesses understand how quickly they're using up their cash reserves.

2. How Does the Calculator Work?

The calculator uses the burn rate formula:

Where:

• Monthly Expenses — Total operating costs per month
• Cash Balance — Current available cash reserves

Explanation: The formula calculates what percentage of your total cash is being spent each month, giving insight into your financial runway.

3. Importance of Burn Rate Calculation

Details: Monitoring burn rate is crucial for startups and businesses to understand their financial health, predict when they might run out of cash, and make informed decisions about fundraising or cost-cutting.

4. Using the Calculator

Tips: Enter your total monthly operating expenses and current cash balance in dollars. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a good burn rate percentage?
A: This varies by industry and growth stage, but generally below 20% is considered healthy for established businesses, while startups may have higher rates.

Q2: How does burn rate relate to runway?
A: Runway (in months) = Cash Balance ÷ Monthly Expenses. Burn rate percentage helps visualize this relationship.

Q3: Should revenue be subtracted from expenses?
A: For net burn rate, yes. This calculator shows gross burn rate. For net burn, use (Expenses - Revenue) instead of just Expenses.

Q4: How often should burn rate be calculated?
A: Monthly calculation is standard, but during critical periods, weekly or even daily tracking may be beneficial.

Q5: What actions should be taken based on burn rate?
A: High burn rates may indicate need for cost reduction, revenue increase, or additional funding to extend runway.