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Burn Rate
There are also those research type companies that
raise equity and invest in R&D, in the hopes of developing a product. In
such situations, one needs to review the running rate (“burn rate”) of
losses, or cash drain. Normally, the burn rate is expressed in months or
years. The burn rate determines when product sales must start generating
enough cash flow to cover expenses, or when additional equity is needed.
While
companies can be truly creative with insufficient cash, it’s hard to
function without proper capitalization. It is important, therefore, to
invest in well-capitalized organizations; leave companies with insufficient
cash to the speculators.
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Window Dressing
Cash Gap
Cash Per Share
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