When a company has 2.6 years of burn rate left. Is it considered a bad company? Why?
Answer-
The burn rate of 2.6 years is the median effective remaining life where the companies solicit shareholders for fresh reserves before the existing supply of available shares starts to decrease.
When the company has 2.6 years of burn rate left it is
considered as a company which is running out of cash and it will
have to raise capital to sustain in the future through shareholders
and increase the reserves of the company.
The company can be considered bad company as the chances of revival
are difficult as the company may find difficult to convince the
shareholders to raise money.
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