Cash Runway
Also called: runway, cash burn runway
What is Cash Runway?
Cash runway is how long a business can keep operating at its current rate of cash burn before it runs out of money, usually expressed in months.
Why cash runway matters
It is the single most useful number a small business can carry in its head, and it is not the same as profit. A business can be profitable on paper and still have three months of runway if receivables are slow and stock is heavy.
What shortens runway
Runway shortens when days sales outstanding stretches, when stock builds up, or when payables get compressed by a statutory deadline. Track it monthly alongside the cash flow statement rather than calculating it once during a scare.
Frequently asked questions
No. Profit is an accounting result; runway is about cash timing. Profitable businesses run out of cash regularly.