Burn Multiple Calculator

Compare net cash burn with net new annual recurring revenue

Your result will appear here.

About the Burn Multiple Calculator

Burn multiple compares net cash burn with net new recurring revenue over the same period. It is used by recurring-revenue businesses to evaluate how much cash is being consumed to create additional revenue scale.

The metric can be informative for growth efficiency, but it is sensitive to the exact definitions of burn and recurring revenue. One-time collections, financing cash flows or revenue reclassifications can distort the result.

How to Use the Burn Multiple Calculator

  1. Enter net cash burn for the period.
  2. Enter net new recurring revenue for the same period.
  3. Calculate the multiple.
  4. Review the underlying growth and cash movements before comparing the figure with external benchmarks.

How the Calculation Works

Burn multiple = net cash burn ÷ net new recurring revenue.

Net cash burn should represent operating cash consumption under the chosen convention, while net new recurring revenue is the increase in recurring revenue over the same time basis. If net new recurring revenue is zero or negative, the ordinary efficiency ratio becomes difficult to interpret.

Worked example

Burn Multiple Calculator Worked Example

$2 million net burn and $1 million net new ARR

Burn multiple = $2m÷$1m = 2.0.

Result guide

Understanding Your Burn Multiple Calculator Result

A 2.0 burn multiple means two dollars of net cash burn were associated with each dollar of net new recurring revenue under the selected definitions. Lower multiples generally indicate more efficient growth, all else equal.

Before you rely on the answer

Assumptions and Limitations

  • Burn and recurring-revenue change cover the same period.
  • Financing cash flows are excluded from operating burn.
  • Recurring revenue is measured consistently.

Practical tip

Using This Result in Practice

Use several quarters rather than one isolated period. Collections timing, annual prepayments and large hiring waves can make a single-quarter burn multiple unusually high or low.

Related calculations

Useful Calculations to Continue With

If net cash consumption still needs to be calculated, use the Burn Rate Calculator.

If you want the broader percentage change in total revenue rather than recurring-revenue efficiency, use the Revenue Growth Calculator.

Common questions

Burn Multiple Calculator FAQ

What does burn multiple measure?

Net cash burn divided by net new recurring revenue.

Is a lower burn multiple better?

Generally it indicates more growth per dollar of burn, but definitions and business stage matter.

What if net new recurring revenue is zero?

The ordinary ratio is undefined or not economically meaningful.