What this calculator measures
Cash runway estimates how long available cash can support operations at the current net burn. Net burn equals monthly cash expenses minus monthly cash revenue. If cash revenue equals or exceeds expenses, the model has no positive burn and a finite runway is not calculated.
Use cash values rather than accounting revenue and expense when liquidity is the question. Annual prepayments, receivables, debt payments, capital purchases, tax, and irregular expenses may create cash movements that a simple monthly average misses.
Common use cases
Use this model when the inputs describe the same decision, period and customer or product scope.
- Estimate net monthly burn and how many months current cash can support operations.
- Use the result with the recorded inputs: Available cash, Monthly cash revenue, Monthly cash expenses.
- Compare multiple scenarios before making a finance decision.
Formula
Runway is a planning estimate and should be updated whenever cash inflows or expenses materially change.
Formula breakdown
- Available cash should exclude amounts unavailable for normal operations.
- Net burn should reflect recurring cash outflow minus recurring inflow.
Worked example
Available cash is $300,000, monthly cash revenue is $55,000, and monthly cash expenses are $85,000. Net burn is $30,000 per month, giving an estimated runway of 10 months. A 10% expense increase would shorten that runway if revenue did not change.
Scenario comparison
$240,000 available cash and $40,000 monthly net burn gives about 6 months runway.
Reducing burn to $30,000 extends runway to about 8 months.
How to interpret the result
Runway is not a deadline forecast; it is a scenario based on current averages. Update it at least monthly and whenever hiring, fundraising, pricing, collections, or major spending changes.
Maintain a cash forecast by date for operational decisions. The runway ratio is a useful summary, while a forecast reveals payment timing and low-cash points within a month.
What a good result looks like
Longer runway creates more time to reach milestones or finance the business.
Track the trend rather than only the current month.
Common mistakes
- Using accounting loss as cash burn without reconciling non-cash and working-capital items.
- Including restricted cash as fully available.
When this metric can mislead you
Constant-burn models miss lumpy hiring, tax, annual-payment and collection patterns.
Runway can fall abruptly when deferred liabilities become payable.
How to use the result in a decision
Use runway for spending, hiring and financing timing.
Build a month-by-month cash forecast when flows are lumpy.
Assumptions and limitations
- Available cash is unrestricted and accessible for operations.
- Revenue and expenses represent monthly cash movement.
- Net burn remains constant through the modeled period.
- Financing, one-time cash flows, working capital, and minimum cash reserves are excluded.