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💸 Cash Burn and Cash Run Rate: Why Cash Is King #Excel #ExcelTutorial #ExceTips #shorts

There's a popular saying in finance: "Profitability is vanity, but cash liquidity is sanity—and cash is king." But how well do you understand your cash position? Are you actively tracking your cash burn and run rate?

In this post, we'll explore how to monitor your cash run rate using Microsoft Excel formulas, including dynamic arrays for speed and flexibility. The graphic illustrates how many months' worth of cash burn your current balance can cover.

🔥 What Is Cash Burn?

Cash burn refers to the amount of cash a company spends over a given period (typically weekly or monthly) based on its operating model. This includes expenses like payroll, rent, marketing, and other overheads.

⏳ What Is Cash Run Rate?

Cash run rate measures how long your current cash reserves can sustain business operations. It's calculated as:

Cash Run Rate = Current Bank Balance ÷ Monthly Cash Burn

This metric helps businesses anticipate liquidity crunches and plan remedial actions proactively.

🧠 Why It Matters

Understanding your cash run rate is critical for treasury management—whether you're a startup or a large enterprise. It empowers you to:

Forecast financial sustainability
Make informed spending and investment decisions
Prepare for fundraising or cost-cutting measures
Avoid sudden cash flow crises

Curated by Adeyemi Ladejobi
FCA, FFA, FIPA, ACTI
(Chartered Accountant and Financial Modeler)
#cfo #financialcontroller #treasurymanager #dynamicarray #cashmanagement #liquiditymanagement #cashisking