Burn rate measures cash consumption per month, in two flavors that must never be confused in the same sentence. Gross burn is total cash out: payroll, rent, equipment, services. Net burn subtracts reliable cash in (grant instalments, tax-credit refunds when received, early revenue), and is the figure that divides into cash to give runway. A company stating “burn” without the adjective in a board document creates exactly the ambiguity diligence exists to catch.
Reading burn well means normalizing it. One-off items (an equipment purchase, a legal bill, an annual insurance premium) belong in a separate line, not in the monthly run rate; a founder who lets a robotics test-rig purchase sit in the March burn figure shows a 2x spike that means nothing. The useful presentation is a run-rate burn with one-offs called out, trended over quarters.
The management discipline is tiering: which costs are committed (leases, notice periods), which are controllable within a quarter, which are discretionary today. That tiering is what turns a downside scenario from a spreadsheet exercise into an executable plan, and it is the first question a serious board asks when a milestone moves.