What is Runway?
Months of cash left at the current burn — cash balance ÷ average monthly net burn.
Runway is how many months the company can keep operating before the cash hits zero, at the current rate of consumption. It's the single number a board meeting starts from: every strategic option — hire, cut, raise — is priced against it.
The formula is cash balance divided by average monthly net burn. The average matters: dividing by one month's burn makes runway whipsaw with every payroll cycle and tax date. A trailing 3-month average is the usual convention; a company planning a raise computes runway to the raise date plus a buffer.
Runway is a snapshot, not a prophecy — it moves with both the balance and the burn. That's why it belongs in a table per month, not as a single cell: whether the trend is widening or narrowing is the real signal, and a hiring plan that "only" adds 6% to burn shortens a 4-month runway by three weeks.
Formula
Runway (months) = cash balance ÷ average monthly net burn
Use the trailing 3-month average of net burn for the divisor. Balance is the latest closing cash, not the bank's available balance minus pending items.
The Sumwise question
Calculate runway: the cash balance divided by the trailing 3-month average net burn, in months — and show the monthly burn and balance trend so the direction is visible.
Runs on cash_activity.csv. The same sample the burn-rate & runway live demo runs on — the September balance is $1,491,000 after nine months of drawdown.
Worked example — cash_activity.csv
| Cash balance, end of September | $1,491,000 |
| Trailing 3-month average net burn | $351,333 |
| Runway | 4.2 months |
| Naive single-month divisor (Sept burn only) | 4.2 months |
| Runway in January (balance $4,186,000 ÷ Jan burn $314,000) | 13.3 months |
Runway is 4.2 months — $1,491,000 ÷ $351,333 average burn. In January the same math gave 13.3 months: the trend, not the snapshot, is the alarm.
cash_activity.csv — drop it into the demo's Your-own-CSV tab (or Excel) and re-run the example.
Common questions
How much runway should a company keep?
Conventional guidance is 12–18 months for a venture-backed company — roughly a year of operating plus the time a raise actually takes. Below 6 months, options narrow sharply, which is why the monthly trend matters more than any single reading.
Should the divisor include planned hiring?
That's a scenario, not the current-state number. Compute runway at today's burn first, then re-run the same query at the planned burn — the difference between the two is what the hiring plan costs in months of cash.
Why does my runway move even when spending is flat?
Because the balance moved — collections timing, prepayments, capex. Runway is a ratio of two living numbers; re-computing it every month from the export (rather than editing a cell) is what keeps it honest.
Compute runway on your own export, every month
Free workspace: 10 questions/day, files up to 10 MB. Pro $15/mo ($99/yr) for 100 MB. Your files never leave your browser.
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Related terms
Burn rate
How much cash the company consumes per month — net of what's coming back in.
Working capital
The cash tied up in running the business day to day — current assets minus current liabilities.
Rolling forecast
Actuals for closed months plus a re-cut forecast for the rest of the year — same horizon, refreshed every cycle.