For Essentium Materials, the company profiled in the opening feature in Chapter 8, an essential financial metric is to work to grow its monthly revenues faster than its monthly ________ rate.
A) accounts payable
B) accounts receivable
C) burn
D) return
E) profitability

Question

Quizplus · Accepted Answer

The burn rate refers to the rate at which a company is spending its cash reserves in order to fund the business. For Essentium Materials, it is important to grow its monthly revenue faster than its burn rate in order to ensure it is not running out of cash too quickly and can sustain its operations. Accounts payable and accounts receivable are not relevant to this financial metric, and return and profitability are not mentioned in the context of the opening feature.

For Essentium Materials, the Company Profiled in the Opening Feature