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A "cash zero date" is the forecasted date at which a company will run out of cash if it does not raise additional funds, reduce costs, or generate more revenue. This date is a crucial financial milestone for startups as it highlights the importance of cash flow management and the need for financial planning.
Cash zero dates help business founders and their teams understand how much runway they have before they need to secure additional funding. This is calculated based on a company's current cash balance and its burn rate, which is the rate at which it's spending its existing cash. It serves as a warning system, allowing founders to plan ahead to avoid running out of cash unexpectedly. In other words, a cash zero date is a critical tool for managing a startup's financial health and longevity.
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