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Cash & working capital
Cash runway
How many months the business can keep operating at its current net burn before cash reaches zero.
Owned by: Entry analystTest band: Entry analyst
The formula
Runway (months) = Cash ÷ Monthly net burn
In practice
Quote it in months and know the date. Below six months, the raise or the cuts have to be under way already.
The kind of thing the test asks
- Cash is $600k and net burn is $75k a month. What is the runway?