Cash Burn Calculator

Businesses around the world are suffering from the unexpected impact of the pandemic. We've made available a free cash burn calculator tool to help business owners and business leaders assess their survival rate during a period when there is a significant reduction in the level of sales revenue.

Do you want to know how much cash you will need every month to survive a downturn in sales such as during COVID-19 pandemic?

Based on the amount of cash you have do you want to know your survival rate, the number of months you can keep operating your business during the period when you experience reduction in revenue?

If so, we've got you covered with our free cash burn rate calculator.

Benefits of using the calculator

• You can use it as a guide to help improve your current financial position.
• You can use it to help in pro-actively develop and implement strategies so you can be more prepared to increase the survival rate of your company's operations when you experience a downturn in the level of your business performance.

To illustrate assuming a normal operating environment, the cash burn rate over a 3-month period is calculated as follows:

Monthly Burn Rate = (Cash balance at the beginning of the period -  Cash balance at the end of the period) / # of months in the period.

For example: Cash at the start of the period = $100,000. Cash at the end of the period = $80,000. Therefore, the Cash Burn rate is $20,000 over a 3-month period or $20,000/3 months = $6,666.67 per month.

During a crisis or disastrous event where there is a significant reduction in sales revenue, the normal cash burn rate calculation in the above example may no longer be relevant.

In this instance, you may need to make some assumptions based on the worst case and best-case scenarios. We suggest you calculate your estimated cash burn rate by calculating your new estimated revenue and expenses until the level of your business operations goes back to normal.

If your cash burn rate is negative you will need to find ways to bring in more cash into the business such as collecting outstanding debts, negotiate a payment plan or request for payment terms extension with creditors, sell inventory at a discount, obtain funding from external sources such as a bank loan, government grants and other means.

Try it out now

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