Larry owns a shoe store. His starting balance last month was $17,300. His ending balance was $14,700. What is Larry's burn rate?

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Multiple Choice

Larry owns a shoe store. His starting balance last month was $17,300. His ending balance was $14,700. What is Larry's burn rate?

Explanation:
Burn rate shows how much cash a business spends during a period. By comparing the starting cash to the ending cash, you can see the amount used. Here, the starting balance is 17,300 and the ending balance is 14,700, so cash spent is 17,300 minus 14,700 equals 2,600. Burn rate is typically stated as a positive amount representing cash outflow, so the burn rate is 2,600. The negative figure (ending minus starting) would describe the change in cash, not the amount spent, and 4,300 isn’t the correct difference between the balances.

Burn rate shows how much cash a business spends during a period. By comparing the starting cash to the ending cash, you can see the amount used. Here, the starting balance is 17,300 and the ending balance is 14,700, so cash spent is 17,300 minus 14,700 equals 2,600. Burn rate is typically stated as a positive amount representing cash outflow, so the burn rate is 2,600. The negative figure (ending minus starting) would describe the change in cash, not the amount spent, and 4,300 isn’t the correct difference between the balances.

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