Runway

Estimate how long available liquidity can fund the operating plan and set financing or cost actions before cash reaches the minimum-liquidity threshold.

Quick answer

Runway is the period for which a company can fund forecast cash consumption from available liquidity under stated operating and financing assumptions. A simple cash-divided-by-burn calculation is a screening measure; a monthly cash forecast is needed when receipts, costs, milestones or funding change over time.

Use the worked example

Meaning and transaction use

An SEC filing defines cash burn through specified operating cash flows, adjustments, partnership inflows and capital expenditure, and describes the measure as non-GAAP without a standard methodology. [S1]

An SEC-filed venture-fund prospectus identifies runway and burn rate among factors used to assess venture opportunities. [S2]

Proposed control method: replace the constant-burn screen with a monthly cash forecast and dated decision triggers.

Worked example

Illustrative runway screen only. Assume 18.0 million of unrestricted cash, a 3.0 million minimum-liquidity reserve and forecast cash consumption of 6.0 million over four months.

Scroll the table horizontally to view all columns.

Measure	Calculation	Result
Cash available above reserve	18.0 - 3.0	15.0m
Average monthly burn	6.0 / 4	1.5m
Simple runway above reserve	15.0 / 1.5	10 months
Financing trigger with four-month lead time	10 - 4	Month 6

The illustrative screen provides 10 months above the reserve and a financing trigger at month 6.

Proposed transaction review process

Set liquidity

Reconcile unrestricted cash, restrictions and minimum liquidity.

Forecast cash

Model monthly collections, payroll, suppliers, capital expenditure and taxes.

Test scenarios

Change growth, margin, timing, hiring and funding assumptions.

Set triggers

Approve financing, cost and milestone actions with owners and dates.

Evidence checklist

Cash

Bank records, restrictions, facilities and minimum-liquidity policy.

Burn

Historical cash-flow reconciliation and approved adjustment definition.

Forecast

Monthly operating plan, collections, commitments and milestones.

Funding

Committed amounts, conditions, timing and contingency routes.

Decision framework

Situation	Proposed action
Runway falls below the trigger	Start the approved financing or cost plan.
Collections move later	Reforecast liquidity and adjust commitments.
Funding remains conditional	Exclude it until the conditions are supportable.
Growth spend raises burn	Test marginal economics and milestone value before approval.

Common errors to check

Using restricted cash as available liquidity.
Treating net loss as cash burn.
Assuming monthly burn is constant without support.
Waiting until the forecast cash-exhaustion date to act.

Set the runway decision calendar

Bring bank balances, the monthly cash forecast and financing lead times to a runway review. Reconcile liquidity and dated action triggers.

Discuss the transaction

Primary references and editorial scope

SEC filing: Cash-burn definition and reconciliation
Example cash-burn definition, reconciliation and non-GAAP limitations. Reference checked 17 September 2026.
SEC filing: Venture screening factors
Example consideration of runway and burn rate in venture-investment assessment. Reference checked 17 September 2026.

Editorial qualification

General transaction education using public United States filings. Figures are hypothetical. Runway is a forecast that depends on the cash, burn, operating and financing assumptions used.

General business information. Obtain advice appropriate to the legal, tax, accounting and financing facts. No offer, lender commitment or transaction outcome is represented. All worked examples use expressly assumed figures. Editorial draft date: 17 September 2026.