There’s no doubt that money can be made by owning shares of unprofitable businesses. For the purposes of this article, cash burn is the annual rate at which an unprofitable company spends cash to fund its growth; its negative free cash flow. The first step is to compare its cash burn with its cash reserves, to give us its ‘cash runway’. […] A cash runway is defined as the length of time it would take a company to run out of money if it kept spending at its current rate of cash burn. […] Since it has a market capitalisation of UK£153m, Purplebricks Group’s UK£47m in cash burn equates to about 31% of its market value.
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