What is my gross monthly cash burn rate?

Cash Burn Rate

Liquidity Measures

Liquidity is a means of understanding a company’s susceptibility to either current of future financial distress. It also helps build a risk profile of the business. But remember though that a single “safe” liquidity measure does not exist across all industries. Likewise, some industries traditionally and successfully trade at low liquidity levels, whereas for others, the same figure is a sign of distress. One indicator of liquidity is understanding your the amount of cash that your company has as its disposal should all revenue sources dry up. But what is my cash burn rate?

Cash Burn Rate (Gross)

Cash Burn rate

How do you get your gross burn rate? Your burn rate is the amount of cash your business “burns” through on average each and every month. The rate is an average of each month’s rate over the past 12 months

What does it mean?

This measure tells you your average monthly outgoings spend and used in part for your cash runway calculations. It is important to understand an average amount of outgoings each and every month

Check your gross cash burn rate with Jazoodle now.

How do we derive your cash runway?

Definition used:

Your company’s cash burn rate is calculated by the following:

total expenses and outgoings in each of the past 12 months

divided by 12

How Can I Improve my cash burn rate?

Your gross burn rate can be improved by a number of measures or changes, including:

  • Reduce your expenses and overheads
  • Implement strong supplier payables policies – stick to their payment terms
  • Emphasis on operational expenses v cosmetic or non revenue sustaining expenses

Video: Cash Runway

Want to speak with an accountant or business advisor?

We’ve some great accountant and business advisor partners. Please see our partner directory and connect with an advisor in your area

Newsletter

Sign up to receive all the latest news, media releases and tips and tricks from Jazoodle

Recent Post

Welcome To Jazoodle

You are just seconds away from creating probably the simplest, quickest, and easiest to understand and powerful view of your company

Jazoodle Business health, (our starter plan), is free for all individual small and medium businesses and not for profit organisations, so get started by signing up – it takes just a few moments!

SIGN IN

Signed up already? We welcome you back to the Jazoodle app. You can sign in here:

SIGN UP

Not signed up yet?
Sign up for free here:

Maintenance Window

Maintenance Window:

We will be performing limited maintenance for a brief period this weekend. This will be limited to some enhancements we’re making with the Single Sign On Functionality via the QuickBooks connectivity and will not affect sign up, or connectivity through Xero, or MYOB

When:

AU: Sunday 27th March 2022 4am – 12 noon

UK: Saturday 2th March 2022 6pm – 2am

US (PT): Saturday 26th March 10am – 5pm

 

Give your business
a head start

Need expert advice as to what your Jazoodle numbers mean or looking for a low cost business template?

business resources from just $5