What this calculator measures
Compare net cash burn with net new annual recurring revenue.
Lower positive multiples indicate more recurring-revenue growth per dollar burned. Enter values from the same reporting period and retain the source data so the result can be reproduced.
Common use cases
Use this model when the inputs describe the same decision, period and customer or product scope.
- Compare net cash burn with net new annual recurring revenue.
- Use the result with the recorded inputs: Net cash burn, Net new ARR.
- Compare multiple scenarios before making a finance decision.
Formula
Lower positive multiples indicate more recurring-revenue growth per dollar burned.
Burn Multiple: formula, inputs and interpretation
Lower positive multiples indicate more recurring-revenue growth per dollar burned.
Formula
Example input values
Worked calculation and answer
A $400,000 net burn producing $250,000 of net new ARR gives a 1.60× burn multiple.
Variable definitions and checks
- Net cash burn (burn): Use a numeric value at least 0. Check its reporting period and definition before comparing it with other inputs.
- Net new ARR (newarr): Use a numeric value at least 0. Check its reporting period and definition before comparing it with other inputs.
When the result may mislead
The calculation reflects the variables named above, not unentered taxes, platform terms, reporting delays, financing charges or external forecasts. For comparisons, keep the same units and reporting period and change one assumption at a time.
How to interpret the result
Use matching periods and investigate whether ARR quality and gross margin justify the burn.
Use the result as a decision aid rather than a standalone conclusion. Compare trends and scenarios using unchanged definitions.
Assumptions and limitations
- Inputs use compatible periods and definitions.
- Amounts are entered before rounding unless stated otherwise.
- The model excludes fields not shown in the calculator.
- Material accounting, tax, legal, and investment decisions require independent verification.
Frequently asked questions
What does Burn Multiple measure?
Lower positive multiples indicate more recurring-revenue growth per dollar burned.
How should I compare results?
Use the same definitions, currency, period, and data source for every comparison.
Is this result a forecast?
No. It is a deterministic estimate based only on the values entered and does not predict future conditions.