The investor’s field guide · R
Runway
An estimate of how long a company can continue before its available cash runs out at an assumed spending rate.
Explained by the editorial team
Runway expresses cash availability in time. A simple calculation divides available cash by monthly net cash burn. It is useful for a company spending more than it receives, but only as reliable as the forecast and the definition of available cash.
A worked example
A company with £300,000 of unrestricted cash and net burn of £50,000 a month has six months of runway on a constant-burn assumption. Hiring, annual tax payments or delayed customer receipts could shorten that period. Restricted cash may not be usable for ordinary spending.
What to examine
Look at the monthly forecast, expected financing dates and minimum cash needed to operate responsibly. Fundraising itself can take time and may fail. A plan that assumes new capital arrives just before cash runs out has little room for setbacks. For seasonal businesses, a simple average can conceal a much earlier low point. Runway is a scenario estimate, not a promise of survival.
General information, not investment, legal or tax advice. Examples are illustrative. Read the disclaimer.