The Burning Ratio is an equation used to assess a company’s performance and uses the relationship between the cash that a business has and its expenses. This ratio measures how fast companies are using their funds to fuel their growth, operations and obligations. A higher burning ratio usually means a company has adequate access to cash and resources and can meet any short-term borrowing needs it may have. Conversely, a low burning ratio suggests the company may not have enough resources or isn’t efficiently allocating them correctly. This can indicate possible financial trouble in the near future.