Cash runway: how much time does the cash buy?
A runway estimate divides usable cash by an assumed monthly cash burn. It is a scenario based on dated financial statements, not a countdown to bankruptcy.
By VolatileShares · Content version 1 · Updated . No live company figures or personalized advice.
Start with cash you can actually use
Read the balance sheet and cash-flow notes. Restricted cash is not necessarily available for operating bills. Debt maturities, committed purchases and financing arrangements can change the picture. Keep the currency and statement date attached to your inputs.
Do not substitute an accounting loss for cash burn
Net loss can include non-cash expenses. Inspect operating cash flow and separately consider capital expenditure. A quarterly cash-flow figure and a year-to-date figure cover different periods; do not divide both by three.
A useful trick: make a stress case
Calculate a base case, then increase assumed burn and reduce usable cash. Ask which upcoming obligation matters most. Keep financing assumptions separate: an expected funding round is not cash already received.
A question worth asking
What if the company generates cash instead of burning it?
A positive-burn countdown no longer applies. Report that this model is not applicable; do not label the business as having infinite guaranteed runway.
Sources & method
These explanations use financial-statement concepts and explicitly stated arithmetic. Verify each company's definitions, dates and contractual terms in its original documents. Relative-volume provider definitions are explained in our methodology.
Limitations, update history & corrections
Version 1 introduces this original explainer. Examples deliberately omit company-specific terms and are not a substitute for filings. No human factual-review credential or investment outcome is claimed. Send a correction through the published contact.