Corporate Treasury & Liquidity Management Lab

Cash Runway & Burn Rate Lab

Calculate monthly net burn rate, cash runway months, Zero Cash Date (ZCD), Default Alive vs Default Dead trajectory, and capital needs in a free treasury lab.

Runway Engine 12-Month Projection Table Treasury Theory FAQ

Treasury Profile Presets

Load benchmark liquidity scenarios.

Step 1: Configure Cash Reserves & Monthly Cash Flows

Treasury & Cash Flow Inputs

Total cash and short-term equivalents.
Minimum emergency cash cushion.
Actual cash receipts per month.
Committed non-negotiable monthly expenses.
Production, hosting, and marketing costs.
Anticipated MoM collections growth.
Anticipated MoM expense expansion.
Cash Runway
16.7 Months
Default Alive (Reaches Breakeven Mo 14)
Net Monthly Burn
-$45,000/mo
Monthly collections: $30,000
Gross Monthly Burn
$75,000/mo
Fixed: $55k | Variable: $20k
Capital Need (18-Mo Target)
$60,000
Required for 18-month safety runway

12-Month Treasury & Cash Balance Forecast Table

Month Monthly Collections Gross Operating Burn Net Cash Burn Ending Cash Balance

Corporate Treasury & Solvency

Principles of Cash Runway Management

Liquidity management determines corporate survival:

  • Gross vs Net Burn: Gross burn measures total monthly cash outflows regardless of revenue. Net burn is the actual cash loss after collections.
  • Default Alive vs Default Dead: If a startup's existing growth rate enables cash flow breakeven before cash reaches zero, it is Default Alive. If not, it is Default Dead and must raise capital or restructure expenses immediately.
  • The 18-Month Fundraising Rule: VCs and lenders recommend maintaining at least 18 months of runway so management has 6 months to execute before beginning a 6-month fundraising process.
  • Reserve Cushion: Maintaining a 1-to-3 month emergency buffer prevents minor collection delays from triggering immediate insolvency.

Analyze capital costs in the WACC & Hurdle Rate Lab.

Mathematical Treasury Formulas

Runway & burn formulas

Gross Burn ($/mo) = Fixed OpEx + Variable OpEx

Net Burn ($/mo) = Gross Burn - Monthly Cash Receipts

Static Runway (Months) = (Cash Balance - Reserve) ÷ Net Burn

Ending Cash (Month t) = Cash_(t-1) - Net Burn_t

Required Capital ($) = (Net Burn × Target Months) - Usable Cash

Measure liquidity ratios in the Financial Ratio Lab.

FAQ

Cash runway & burn rate questions

What is the difference between gross burn rate and net burn rate?

Gross burn rate is the total cash spent on operating expenses each month: Gross Burn = Fixed OpEx + Variable OpEx. Net burn rate is the net cash deficit after subtracting customer collections: Net Burn = Gross Burn - Monthly Cash Receipts.

How is cash runway calculated?

Static cash runway is the number of months a company can operate before exhausting available liquidity: Cash Runway = (Current Cash - Safety Buffer) / Net Monthly Burn.

What is the Zero Cash Date (ZCD)?

The Zero Cash Date is the exact projected calendar month when cash balances will hit zero or reach minimum safety covenant reserves under current revenue growth and expense inflation trajectories.

What does 'Default Alive' vs 'Default Dead' mean?

Coined by Paul Graham, 'Default Alive' means a company will reach cash flow breakeven before running out of money without raising new equity. 'Default Dead' means the company will exhaust its cash reserves before breaking even unless it raises capital or cuts costs.

How much cash reserve buffer should a company maintain?

Most CFOs recommend keeping 1 to 3 months of gross operating expenses in reserve to protect against billing delays, payroll tax timing, or unexpected emergencies.

Can I export the cash runway projection to CSV?

Yes. You can export complete 24-month revenue, gross burn, net burn, and ending cash balances as a UTF-8 CSV spreadsheet with formula defense.

Continue Exploring Cash Flow & Financial Tools

Explore our Cash Flow & Break-Even Hub, measure capital costs in WACC & Cost of Capital Lab, calculate working capital ratios in Financial Ratio Lab, evaluate lease financing in Lease vs. Buy Lab, or analyze ROE drivers in DuPont Analysis Lab.