Cash Burn
Short definition
Cash burn is the net decline in cash over a period, with or without financing. It is not an accounting loss; a profitable firm can burn cash in inventory and receivables.
Detailed explanation
Gross burn is operating cash out; net burn is the decline after collections. A financing inflow hides net burn: a draw does not stop burn, it only extends runway.
Split investment burn (capex) from operating burn (negative OCF). The first is a project choice; the second is the business model or collections.
Why it matters for the CFO
Runway, minimum cash and the funding ask hang on burn. If management says “losses narrowed” while burn rose, receivables and inventory are bloating.
How it is calculated
Net nakit yakma = Dönem başı kullanılabilir nakit − Dönem sonu kullanılabilir nakit (finansman hariç tutulabilir)
Variables in the formula
- Burn: Period net cash outflow
How to read it
Monthly burn moves with season; do not annualise one month. Burn / sales shows whether the model scales. There is no universal acceptable burn; runway and the maturity calendar bind.
Numerical example
Available cash 90 mn TL at month start, 75 mn TL at month end, no new debt → net burn = 15 mn TL.
Related calculators
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.