Cash runway
In one sentenceThe number of months current cash can cover expenses if the cash burn rate continues unchanged, without new financing or improved revenue.
Simply put
Divide available cash by monthly net burn to know when the cash runs out if nothing changes.
A short runway is an early warning: you need time to cut expenses, raise sales, or look for financing, so do not wait until the last month.
Worked example
The startup in the “Cash burn rate” example now has 600,000 SAR and burns 100,000 SAR net each month.
Available cash600,000 SAR
Monthly net burn100,000 SAR
Runway = 600,000 ÷ 100,0006 months
Formula: Available cash ÷ monthly net burn
Don't confuse it with
Payback periodThe payback period is the time to recover the cost of an investment; the runway is how long cash lasts before it runs out.