Time is the other side of your cash balance.
Runway translates available cash into time. Net burn is the difference between cash leaving and cash entering the business each month. Dividing cash by positive net burn gives a steady-state estimate of months remaining.
Cash is different from revenue. Use actual collections and payments where possible, and account for payroll timing, annual contracts, capital expenditure and working capital. A single monthly average cannot capture all of those movements.
The formula, made clear.
- Available cash
- Unrestricted cash, excluding undrawn financing or expected receivables.
- Net burn
- Monthly cash outflows minus cash inflows.
Put the numbers in context.
With $1.2M in cash, $100,000.00 in monthly outflows and $25,000.00 in inflows, net burn is $75,000.00. Estimated runway is 16 months.
| Input | Example value |
|---|---|
| Available cash | $1,200,000.00 |
| Monthly cash outflows | $100,000.00 |
| Monthly cash inflows | $25,000.00 |
| Estimated cash runway | 16 months |
What this calculation assumes
Cash flows remain constant. No new financing, cash restrictions, debt repayments or exceptional payments are included unless entered in outflows.
What to consider next.
Model a lower-revenue or higher-cost case. Set a fundraising start date well before the projected cash-out date.
How we approach financial models →