Definition
Runway estimates how many months you can operate before running out of cash at the current net burn.
Formula
Runway (months) = cash balance / net monthly burn
Example
If cash balance is $1.2M and net burn is $150k/month, runway ~ $1.2M / $150k = 8 months.
How to use it
- Use net burn (cash outflows minus cash inflows), not accounting losses.
- Recalculate runway whenever revenue, collections, or spend changes materially.
Common mistakes
- Using gross burn instead of net burn (runway becomes overly pessimistic).
- Ignoring working capital timing (AR/AP) and deferred revenue effects.
Measured as
Runway (months) = cash balance / net monthly burn
Misused when
- Using gross burn instead of net burn (runway becomes overly pessimistic).
- Ignoring working capital timing (AR/AP) and deferred revenue effects.
Operator takeaway
- Use net burn (cash outflows minus cash inflows), not accounting losses.
- Recalculate runway whenever revenue, collections, or spend changes materially.
- Tie Runway to the same balance-sheet date, scenario, and decision memo you are using elsewhere in the model.
- Document which claims, costs, or adjustments your team includes before comparing numbers across forecasts, covenants, or valuation work.
Next decision
- Quantify the impact with Cash Runway Calculator if you need to turn the definition into an operating assumption.
- Read Cash runway: how to estimate burn, break-even, and survival time if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
Where to use this on MetricKit
Calculators
- Cash Runway Calculator: Estimate runway from cash balance, revenue, gross margin, and operating expenses (optionally with revenue growth).
Guides
- Cash runway: how to estimate burn, break-even, and survival time: A practical guide to runway: net burn, gross profit, break-even revenue, and how to avoid common cash planning mistakes.
- Cohort payback curves: how to model payback with early churn: A practical guide to cohort payback: why payback matters for survival, how early churn affects payback, and how to improve it.
- Unit economics hub: CAC, LTV, payback, and runway (a practical stack): A practical hub for unit economics: CAC, fully-loaded CAC, LTV, payback, margin impacts, burn multiple, and runway planning.
- Runway and burn: gross vs net burn, working capital, and cash levers: A practical guide to runway: compute net burn, understand why cash differs from profit, and how working capital and collections change runway.
- Pipeline coverage and sales cycle math: set realistic targets (and avoid sandbagging): A practical guide to pipeline coverage: connect quota, win rate, sales cycle length, and CAC/payback constraints to set realistic growth targets.