What is Cash Runway & Burn Rate?
Cash runway is the number of months your company can keep operating before running out of cash, based on today’s cash balance and your ongoing net cash burn.
Burn rate is the monthly rate at which the business consumes cash, usually tracked as net burn (cash outflows minus cash inflows) and gross burn (total cash outflows).
Together, runway and burn rate translate your operating model, unit economics, and working capital cycle into a simple survival horizon that founders, CFOs, and investors use to manage liquidity risk, funding timelines, and value creation.
Formula
At its core, the calculator follows the standard net burn and runway relationships used in corporate finance and FP&A.
Net cash burn per month:
Cash runway in months:
If net cash burn is zero or negative (your inflows cover or exceed outflows), you are not burning cash at the current run rate; instead of “months left,” the focus shifts to how to reinvest surplus cash, strengthen operating cash flow, and optimize capital allocation.
Example
Assume a company has:
- Current cash on hand: $600,000
- Monthly cash inflows: $150,000
- Monthly cash outflows: $250,000
First, calculate net cash burn per month:
Net cash burn = $250,000 − $150,000 = $100,000 per month
Then compute cash runway:
Cash runway = $600,000 ÷ $100,000 = 6 months
With a 6-month runway, leadership is in the “watch” zone: there is time to hit key milestones, tighten operating cash flow, and line up the next funding event, but hiring plans and discretionary spend should stay tightly linked to progress on revenue growth, margins, and collection discipline