BU121 Lecture Notes - Lecture 12: Investopedia, Cash Flow, Accrual
Document Summary
Cash burn rate: how quickly a venture burns through"/uses cash: the rate at which a new company uses up capital to finance overhead before generating positive cash flow from operations. investopedia, determine weeks of cash remaining. Cash build rate: how quickly a venture builds cash through collections on sales. Liquidity: the ability of the venture to maintain a build rate high enough to meet its obligations as they come due. Cash burn = the cash a venture expends on its operating and financing expenses and its investments in assets. = cash operating expenses + interest + taxes. + increase in inventories: if inventories have gone up, you must have spent some money in exchange for that increase. Changes in payables and accruals: if you have not paid any bills, you still have the cash remaining at hand. + capital expenditures: any money you have spent on new equipments.
