Runway

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Definition

The Runway KPI refers to the amount of time (usually in months) a business can continue to operate before cash runs out.

Characteristics

Is a calculated KPI that can be estimated by putting Cash on Hand and expected future Net Cash Burn in relation

Calculation

COH
÷ expected future NCB*
= Runway

*Expected future NCB:
If your Net Cash Burn does not fluctuate a lot, the easiest way is to simply take your last months NCB. For more accuracy you can also look at the last months’ average NCB and take into account future events that might influence your future NCB (e.g. special cost or revenue increases).

AliasCash Runway/Startup Runway
Abbreviation
UnitTime (Months)

Example

A company has 100.000 € COH and typically burns (NCB) 10.000 € per month. The estimated Runway of this company is theredore calculated as follows:

100.000  €
÷ 10.000 €
= 10 months