01
What is cash runway?
Cash runway estimates how long a current cash reserve can cover a positive Net Burn Rate. Startups, SaaS companies, online stores, agencies, service companies, and other businesses can use it as a cash-planning reference.
The estimate assumes average monthly inflows and outflows stay unchanged. Positive net burn reduces cash; zero is cash-neutral; negative net burn indicates net cash generation.
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How to calculate cash runway
Determine genuinely available cash on the As of Date, estimate matching average monthly cash payments and receipts, subtract inflows from outflows, and divide cash by a positive result. Currency changes formatting only and never converts amounts.
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Cash runway formula
Net Burn Rate = Average Monthly Cash Outflows − Average Monthly Cash Inflows
Estimated Cash Runway = Current Cash Balance ÷ Net Burn Rate
A finite runway is calculated only for positive net burn. Fractional runway represents part of an average month, not an exact count of working days.
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How to calculate net burn rate
Net burn is monthly outflows minus monthly inflows. Average Monthly Cash Change reverses that sign: inflows minus outflows. The two figures therefore have equal magnitude and opposite signs.
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Cash runway calculation example
On January 15, 2026, suppose available cash is $500,000, average monthly outflows are $100,000, and inflows are $50,000. Net Burn Rate is $50,000 per month, so $500,000 ÷ $50,000 = 10.00 months. The approximate end date is November 15, 2026, and monthly cash change is −$50,000.
06
What should be included in the cash balance?
Current Cash Balance should reflect funds actually available on the As of Date: checking and savings balances, available cash equivalents, and other funds genuinely usable for expenses. No asset is automatically cash.
Do not automatically count restricted cash, unavailable credit facilities, unpaid invoices, or expected financing. Loans, investments, grants, owner contributions, and asset sales can increase cash but may hide underlying operating burn.
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How to estimate monthly cash outflows
Use cash actually paid, potentially including payroll, contractor payments, rent, software, marketing, inventory, taxes paid, debt payments, equipment, and other cash payments. Include committed expenses and use a consistent total-cash or operating-cash scope.
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How to estimate monthly cash inflows
Operating inflows can include customer payments received, subscription collections, cash sales, service payments, and other operating cash receipts. Receivables are not cash until collected.
Investment proceeds, loans, grants, and owner contributions are cash receipts, but including them can obscure operating burn. Choose the scope deliberately and apply it consistently.
09
Gross burn vs net burn in runway calculations
Gross Burn Rate is monthly cash outflows before inflows. Net Burn Rate subtracts monthly inflows and drives this runway calculation. Mixing the two can materially understate or overstate the estimate.
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How to interpret runway results
Runway is a planning estimate, not a guaranteed deadline. Future cost growth or delayed customer payments may shorten actual runway; higher future inflows may extend it. A long runway does not prove profitability or sustainability, and a short runway does not prove inevitable closure.
The Estimated Runway End Date is approximate. This calculator does not model daily cash movement.
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What happens when net burn is zero or negative?
Zero net burn means inflows equal outflows. Negative net burn means net cash generation. In either case, no finite runway or depletion date is calculated from the current rate.
N/A is not a calculation error and does not mean unlimited money or permanent financial safety. One-time or financing inflows may not recur.
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Choosing a reliable measurement period
Choose a period that reflects billing cycles, volatility, and seasonality. A short window may be distorted by one-time receipts or payments; a long window may hide recent spending acceleration. Averages can conceal both seasonality and large individual transactions.
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Cash runway vs break-even point
Runway asks how long available cash may cover current net burn. Break-even asks what sales or output level makes revenue cover costs. They answer different questions and should not be substituted for each other.
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Cash runway vs profitability
Cash runway is not accounting profit. Profit uses accounting recognition rules; runway uses available cash and cash movement. Positive profit does not guarantee adequate runway, and long runway does not prove profitability.
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Common runway calculation mistakes
- Counting restricted funds, unpaid invoices, or expected financing as available cash.
- Using accounting revenue or expense instead of cash received or paid.
- Ignoring payroll, taxes, debt payments, inventory, or other committed obligations.
- Mixing operating burn with financing receipts inconsistently.
- Assuming averages capture seasonality and one-time transactions.
- Treating an approximate end date as a guaranteed deadline.
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Limitations of a simple runway estimate
This calculation holds monthly inflows and outflows constant. It excludes fundraising timing, funding probability, emergency credit, future growth, scenarios, seasonality adjustments, and daily cash timing. Customer-payment delays and changing costs can materially change actual runway.
The result is a planning reference, not a guarantee of future cash flow.
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Frequently asked questions
What is cash runway?
Cash runway estimates how long a current available cash balance can cover a positive net burn rate if average monthly cash inflows and outflows remain unchanged.
What is the formula for cash runway?
Estimated Cash Runway = Current Cash Balance ÷ Net Burn Rate. A finite runway is calculated only when net burn rate is positive.
How do I calculate net burn rate?
Subtract average monthly cash inflows from average monthly cash outflows. A positive result reduces cash, zero is cash-neutral, and a negative result indicates net cash generation.
What is the difference between gross burn and net burn?
Gross burn is average monthly cash outflows before inflows. Net burn subtracts average monthly cash inflows and is the rate used in this runway estimate.
Can cash runway be calculated when net burn is zero?
No finite runway is projected because inflows equal outflows at the entered monthly rates. The calculator shows N/A rather than dividing by zero.
What happens when net burn rate is negative?
Negative net burn means inflows exceed outflows. The calculator shows N/A because the balance is not projected to deplete at that unchanged rate.
Does N/A mean the business has unlimited cash?
No. N/A means a finite depletion point is not calculated from the entered rates; it does not imply unlimited cash or permanent financial safety.
What should be included in current cash balance?
Include checking and savings balances, available cash equivalents, and other funds genuinely available to pay expenses on the as-of date. Do not automatically include restricted cash, unavailable credit, unpaid invoices, or expected financing.
Should accounts receivable be included as cash?
No. Receivables and unpaid invoices are not cash until payment is actually received.
Should investment funding be included in cash inflows?
Investment proceeds, loans, grants, and owner contributions can increase cash, but including them may hide underlying operating burn. Choose total or operating cash burn and apply the scope consistently.
Which period should I use to estimate monthly burn?
Use a representative period that matches the business cycle and cash-flow volatility. Short periods can be distorted, while long periods can hide recent spending changes.
Can cash runway include fractional months?
Yes. A fractional result is part of an average month, not an exact number of working days, and the calculator preserves it to two decimal places for display.
How is the estimated runway end date calculated?
Full runway months are added as calendar months to the as-of date, with month-end adjustment when needed. The fractional month is converted using 30.436875 average days and rounded to the nearest day.
Is cash runway the same as profitability?
No. Runway measures available cash against net cash burn. Accounting profit follows recognition rules, and a profitable business can still face cash constraints.
Is cash runway the same as break-even?
No. Runway estimates how long cash may last at the current burn rate, while break-even identifies the sales or output level at which revenue covers costs.
Why can actual cash runway differ from the estimate?
Seasonality, one-time payments, delayed collections, changing costs or inflows, and financing events can all make actual cash movement differ from unchanged monthly averages.
What happens when current cash balance is zero?
With positive net burn, runway is 0.00 months and the end date is the as-of date. With zero or negative net burn, finite runway remains N/A even though the entered balance is zero.
Does changing Currency convert the entered values?
No. Currency changes symbols and formatting only; it does not convert amounts or alter the numerical calculation.
What are the limitations of this runway calculation?
It uses unchanged averages, not daily cash movement, forecasts, seasonality, fundraising timing, funding probability, emergency credit, or scenario analysis. It is a planning estimate, not a guarantee.