It 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*
__________________
= Runaway
*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).
A company has 100.000 € COH and typically burns (NCB) 10.000 € per month. The estimated Runway of this company is therefore calculated as follows:
100.000€
÷ 10.000 €
________
= 10 Months
Alias | Cash Runway/Startup Runway |
Abbreviation | – |
Unit | Time (Months) |