burn rate

Rate at which a new company spends available cash before it begins to receive cash from its trading activities. The burn rate has become an important measure for analysing the fortunes of nascent dotcom companies. With phenomenal growth fuelled by huge spending on advertising, but with little or no earnings, analysts looked at how long the company would survive on existing funds in the bank, assuming that costs remained at the same level. This measurement becomes critical as investors become reluctant to provide funding at a later stage for dotcom companies.