Cash Runway
What is Runway?
Runway is the number of months a company can keep operating before running out of cash, given its current cash balance and net burn rate.
Runway is a cash planning estimate. Dividing available cash by monthly net burn provides a useful first check, but a real spending plan rarely stays flat. Use the calculator to establish a baseline, then build a dated cash forecast for hiring, renewals, tax payments, and other known changes.
Also known as: Cash Runway, Startup Runway
Formula
Runway (months) = Cash Balance / Monthly Net Burn | Variable | Meaning |
|---|---|
Cash Balance | Cash and cash equivalents currently in the bank. |
Monthly Net Burn | Cash spent per month net of cash collected. |
How to use it
- Choose the cash that is actually available for operations. Identify restricted amounts and any minimum reserve you want to preserve.
- Estimate monthly net cash outflow from operations. Look beyond a single month if annual prepayments or large bills distort the recent result.
- Divide available cash by monthly net burn. Then stress the estimate with slower collections, lower sales, or planned cost increases.
Worked example
Hypothetical worked scenario
A fictional company has $1.2 million available cash and consumes $100,000 per month. It plans a hiring change that increases monthly burn to $150,000 after three months.
Flat-burn runway = $1.2 million ÷ $100,000 = 12 months. After three months, cash is $900,000; at $150,000 monthly burn, that funds six more months, or nine months total.
The constant-rate calculator overstates the planned runway by three months in this scenario. The dated forecast is the decision tool when the spending schedule is already known.
Calculate with your numbers
Runway (months) = Cash Balance / Monthly Net Burn | Variable | Meaning |
|---|---|
Cash Balance | Cash and cash equivalents currently in the bank. |
Monthly Net Burn | Cash spent per month net of cash collected. |
Worked example
- Cash Balance
- $1,200,000
- Monthly Net Burn
- $100,000
- → Runway (months)
- 12
Enable JavaScript to use the interactive calculator.
Open the Runway calculator for a focused view of the inputs.
What the result tells you
Work backward from the minimum cash balance and the lead time for actions such as reducing commitments or arranging financing. Review actual cash against forecast regularly. A model that updates from collections and signed expenses gives more warning than a fixed runway number repeated each month.
Assumptions and common mistakes
- Do not count unsigned financing or uncertain receivables as available cash.
- At zero or negative net burn, a finite cash-exhaustion date cannot be calculated from this model. That does not eliminate future cash risk.
- A cash reserve, debt repayment, or annual vendor bill can create a constraint before the modeled balance reaches zero.
Choose which metrics matter for your stage, alongside Runway.
Frequently asked questions
Should I use gross or net burn?
Use net cash outflow after operating inflows for this calculator. Gross spending alone ignores the cash the business collects.
How much runway is enough?
The answer depends on obligations, revenue reliability, and the time required to respond. Use a scenario forecast and action dates rather than treating a generic month count as a guarantee.
Sources and methodology
The references below explain the underlying methods. Our worked scenarios use hypothetical figures; they are not company results or current market benchmarks.
- Stripe Atlas: Business banking and cash management
Cash balance and net monthly burn as inputs to runway.
Found an error or a definition that differs from your reporting? Send a correction with the page URL and the method you use.