Investors and businesses use a cash flow analysis to understand how much cash the
business generates and spends over a specific period.
Subtracting total costs from total cash calculates an ending cash balance.
A burn rate identifies the amount of cash a company is spending every month and
measures cash flow. Subtracting a month's ending balance from a month's starting
balance calculates a burn rate.
A run rate predicts a company's future performance by using the current financials
for a specific period, usually a month, to predict the company's future performance.
Multiplying a month's revenue by 12 calculates a run rate.
Zach owns a car detailing shop. Last year, he had a beginning cash balance of $5,600,
total cash sales of $21,800, $4,700 in utilities, $3,400 in loan payments, and $1,200
in marketing costs. What was Zach's ending cash balance for last year?
$2,098
$987,000
$18,100
$1,200