BU121 Study Guide - Operating Leverage, Product Stewardship, Global Reporting Initiative

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Cash burn is how much cash a company will spend in a certain period (dependant on time of financial record. ) Cash burn = operating expenses + interest paid + taxes + increase in. Inventories (increase in payables + increase in accruals)+capital expenditures (add back depreciation if given net) It is how much cash you generate in a certain period of time. What is net cash build, and then how do you find monthly cash burn, monthly cash. Net cash build is cash burn cash build. This will show you how much you are net burning or building per period. Divide by the months (if it is yearly data, or by 3 if quarterly) and find the monthly net cash burn rate. Then take this against the cash you have remaining and will see how much time you have left until your money runs out. Good indication of if you"re in need of external financing.

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