Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the right price. For example, biotech and mining exploration companies often lose money for years before finding success with a new treatment or mineral discovery. But the harsh reality is that very many loss making companies burn through all their cash and go bankrupt.

So should Coast Entertainment Holdings (ASX:CEH) shareholders be worried about its cash burn? 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. First, we'll determine its cash runway by comparing its cash burn with its cash reserves.

Check out our latest analysis for Coast Entertainment Holdings

When Might Coast Entertainment Holdings Run Out Of Money?

A company's cash runway is calculated by dividing its cash hoard by its cash burn. When Coast Entertainment Holdings last reported its December 2023 balance sheet in February 2024, it had zero debt and cash worth AU$106m. In the last year, its cash burn was AU$32m. Therefore, from December 2023 it had 3.3 years of cash runway. Notably, however, analysts think that Coast Entertainment Holdings will break even (at a free cash flow level) before then. In that case, it may never reach the end of its cash runway. Depicted below, you can see how its cash holdings have changed over time.

Is Coast Entertainment Holdings' Revenue Growing?

We're hesitant to extrapolate on the recent trend to assess its cash burn, because Coast Entertainment Holdings actually had positive free cash flow last year, so operating revenue growth is probably our best bet to measure, right now. Although it's hardly brilliant growth, it's good to see the company grew revenue by 12% in the last year. Clearly, however, the crucial factor is whether the company will grow its business going forward. For that reason, it makes a lot of sense to take a look at our analyst forecasts for the company.

Can Coast Entertainment Holdings Raise More Cash Easily?

Notwithstanding Coast Entertainment Holdings' revenue growth, it is still important to consider how it could raise more money, if it needs to. Generally speaking, a listed business can raise new cash through issuing shares or taking on debt. Commonly, a business will sell new shares in itself to raise cash and drive growth. By comparing a company's annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate).