hi team - on a 10-k, and specifically the statement of cash flows, is the following line item the same thing as "cash burn"?
"Net increase (decrease) in cash and cash equivalents: =($100)"
So for example, for company A, could you tell your MD that cash burn in 2020 was -$100?
thanks all. really appreciate the help!
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There are two kinds of cash burn rate: gross burn and net burn.
Most people refer to net burn as the ‘burn rate’ - which is simply the total cash lost by the company in a given period. In this case, you’re correct: the change in cash position over the course of the year is the cash burn. The convention is that burn rate is stated on a monthly basis - as one is typically interested in how much the company is burning right now - which then allows you to calculate cash runway.
Gross burn is simply the companies total opex in a given period.
Very help! So in the above, my example is net cash burn on an annual basis?
And operating expenses, or SGA, for the year would be gross cash burn?
I have no clue about the ‘convention’ but shouldn’t cash burn be the FCF generated (or the lack thereof) by the company? That is a figure that would resonate for me.
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