BURN RATE & RUNWAY CALCULATOR.

This calculator shows how quickly a company uses its cash and estimates how many months the current cash balance can support its operations. You can change any of the values below, and this will auto-update all results.

background

Gross burn is the total cash a company spends during a month. Net burn adjusts gross burn for cash revenue received during the same month. It is calculated as monthly cash expenses minus monthly cash revenue. Cash runway estimates how long the company can continue operating if its cash balance, revenue and expenses remain unchanged. It is calculated by dividing the current cash balance by the monthly net burn.

A runway estimate is most useful when its inputs represent a sufficiently long and representative period. Hiring plans, seasonal receipts, one-off payments, debt repayments and future fundraising should be modelled separately when they are material.

a cash runway example

Let's assume a startup has a cash balance of £250,000, receives £40,000 in monthly cash revenue and incurs £65,000 in monthly cash expenses. This means that

  1. the startup's gross burn is £65,000 per month
  2. its net burn is £65,000 - £40,000 = £25,000 per month
  3. its estimated cash runway is £250,000 / £25,000 = 10 months

If monthly revenue reaches or exceeds monthly expenses, the company has no finite cash runway under this simplified model because it is no longer consuming its existing cash balance.

burn rate & runway calculator

To use the calculator, enter the currency, current cash balance, monthly cash revenue and monthly cash expenses. The calculator will compute gross burn, net burn, estimated runway and the approximate cash-out month.


 

 

 

 
Gross Burn
£65,000 / month
 
Net Burn
£25,000 / month
 
Estimated Runway
10.0 months
 
Estimated Cash-out Month
 
Interpretation
 

FREQUENTLY ASKED QUESTIONS.

  1. What is gross burn?

    Gross burn is the total amount of cash a company spends during a month before taking cash receipts into account.

  2. What is net burn?

    Net burn is monthly cash expenses minus monthly cash revenue. It shows how much of the existing cash balance the company consumes each month.

  3. How is cash runway calculated?

    Cash runway is calculated by dividing the current cash balance by monthly net burn. A £250,000 balance and £25,000 monthly net burn produce 10 months of runway.

  4. What happens when revenue covers monthly expenses?

    When monthly revenue equals or exceeds monthly expenses, net burn is zero or negative. This simplified calculation therefore reports no finite cash-out date.

  5. Why can actual cash runway differ from the estimate?

    Revenue timing, seasonality, hiring, taxes, capital expenditure, financing and one-off payments can all change the cash balance and monthly burn rate.

CREDITS & REFERENCES

  1. Business Development Bank of Canada: Cash runway definition and formula
  2. Other tools: Equity Dilution Calculator, Margin Calculator, Markup Calculator, Margin and Markup Calculator, Percentage Change Calculator, Sales Revenue Target Calculator, Customer Acquisition Cost (CAC) & LTV Calculator, Break-Even Analysis Calculator, Cap Table / Pre-Money vs. Post-Money Valuation Calculator, Metaverse Startup Ideas and Metaverse Business Opportunities

INTRIGUED?

For more information on how our advisory services can help you build a robust financial plan, please contact us.

Book a Discovery Session now!
Get to know us. Put us to the test.