Burn Rate Calculator
Separate what you spend from what you lose, find the revenue level at which the bleeding stops, and model the downturn before it arrives.
Burn Rate Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- A single-month snapshot is distorted by seasonality and one-off payments.
- Simple burn models omit working-capital movements, which understates true cash consumption.
- Assumes the current cost structure persists, which rarely survives a real downturn.
In short: Cash costs of $161,000 a month against $100,000 of revenue is a net burn of $61,000, while gross burn is the full $161,000. Cash break-even sits at $161,000 of monthly revenue — every $10,000 recovered cuts the burn dollar for dollar.
Formula
Burn is a cash measure, so depreciation is excluded and debt principal is included — the reverse of how the income statement treats both.
Worked Example
- Total the cash going out. $76,000 of cost of sales, $65,000 of payroll and $20,000 of other costs is $161,000 of gross burn. Depreciation is excluded because no cash leaves.
- Subtract the cash coming in. $161,000 less $100,000 of revenue is a net burn of $61,000 a month — what the business actually loses.
- Find the cash break-even. At $161,000 of monthly revenue the burn stops. You are $61,000 short, or 37.89% below the line.
- Add debt service. $29,333.33 of interest and principal takes the true monthly requirement to $90,333.33. Principal never appears on the income statement.
- Read the cover. $180,000 of cash covers 1.99 months at that rate — the figure that determines how much time there is to act.
Burn rate is usually presented as a startup metric, which obscures its real use. This is a profitable, established business: at full revenue of $200,000 a month it generates $39,000 of cash. The scenario modelled here is revenue halving, and the result is a $61,000 monthly burn that becomes $90,333.33 once debt service is included. That gap between the two figures is the whole point — principal repayment of $200,000 a year is invisible on the income statement, so a company can report a profit and still consume cash every month. Any business carrying amortising debt should know its cash break-even revenue, because that number, not the accounting break-even, is what determines survival in a downturn.
Strengths & Limits Of This Model
Where this engine is strong
- Reports gross and net burn separately rather than conflating them.
- Includes debt service explicitly, the item income statements hide.
- States the cash break-even revenue as an operational target.
Where it stops
- Cannot model the revenue response to cost cuts.
- Excludes working-capital swings unless entered as part of cash costs.
Practical Use Cases
Stress-testing a demand shock
Model revenue at 70%, 50% and 30% of plan. The burn at each level tells you which cost actions become necessary and when.
Reporting to investors or a board
Give gross and net burn separately. High gross with low net means scale; low gross with high net means there is almost no revenue.
Deciding between cost cuts and fundraising
Financing takes months. Under a year of cover, start both. Size the time available with the Runway Calculator.
Setting a minimum revenue floor for covenant safety
Cash break-even and covenant compliance are different thresholds. Check the second with the Debt Service Coverage Ratio Calculator.
Methodology & Editorial Standards
Burn rate measures the pace at which cash leaves the business, and the engine reports the two standard forms because they answer different questions. Gross burn is total cash operating outflow regardless of revenue and measures the cost of running the operation; net burn subtracts revenue and measures the amount actually lost each month. Investors ask for both, since a company with high gross and low net burn is operating at scale while one with low gross and high net burn has little revenue at all. The engine excludes depreciation and amortisation, which are accounting allocations rather than cash movements, and includes debt service in a separate line because principal repayment is a genuine cash outflow that never appears on the income statement — the single most common reason a profitable business is surprised by its own cash position. Cash break-even revenue, defined as the revenue level equal to gross burn, is reported as the operational target, since it is the point at which reserves stop being consumed. Although burn is conventionally associated with early-stage companies, the more valuable application is downturn stress-testing of an established business, where the question is not whether cash is being consumed today but at what revenue level it would begin. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Burn Rate Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
What is the difference between gross and net burn?
Gross burn is everything you spend — $161,000 here. Net burn subtracts revenue and is what you actually lose — $61,000.
Which burn figure do investors want?
Both. High gross with low net burn signals a business operating at scale; low gross with high net burn signals almost no revenue.
Should depreciation be included in burn?
No. It is an accounting allocation, not cash leaving the business. Burn is strictly a cash measure.
Should debt repayment be included?
Yes. Principal is a real cash outflow that never touches the income statement, which is why profitable businesses still burn cash.
What is cash break-even revenue?
The revenue level equal to gross burn — $161,000 a month here. Below it you consume reserves; above it you build them.
Is burn rate only for startups?
No. Its most valuable use is downturn stress-testing an established business to find the revenue level at which cash consumption would begin.
How do I reduce burn quickly?
Revenue reduces burn dollar for dollar without harming capacity. Cost cuts work too but may reduce the ability to recover revenue later.
What burn is too high?
It depends entirely on cash reserves. The meaningful measure is months of cover, not the absolute figure.
How does burn relate to runway?
Runway is cash divided by net burn. Here $180,000 ÷ $90,333.33 is 1.99 months including debt service.
Should working capital changes be in burn?
For a strict cash view, yes — inventory builds consume cash. Many simple burn models omit them, which understates the true rate.
What is a burn multiple?
Net burn divided by net new recurring revenue, used in SaaS to measure how much cash is consumed to add each dollar of revenue.
Does seasonality distort burn?
Considerably. Use a trailing three-month average for seasonal businesses rather than a single month.
Can burn be negative?
Yes — that means cash generation. At full revenue this business generates $39,000 a month rather than burning.
When should I act on burn?
When cover falls below about twelve months. Financing takes months to arrange, so waiting until cash is low removes the options.
Does cutting payroll always reduce burn?
Immediately, yes, but severance costs cash up front and lost capacity can reduce revenue, which raises net burn again.
How does burn differ from accounting loss?
Burn excludes depreciation and includes principal repayment. A business can post a profit and burn cash, or post a loss and generate it.
Is this burn rate calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.