Cash Runway
Definition
The number of periods a company can continue operating at its current net burn rate before exhausting available cash reserves. Cash runway is calculated by dividing current cash and cash equivalents by the current period net burn rate. Cash runway must be recalculated at minimum monthly. Under the FFI Standard, cash runway is calculated using a trailing three-month average net burn rate as the denominator unless the company has documented a rationale for a different base period.
Common Misapplication
The most common misapplication is calculating runway using the most recent single month's net burn rate rather than a trailing average. A month with unusually high or low expenditure produces a runway figure that is not representative of the ongoing cash consumption rate. A three-month trailing average is more stable and more reliable as a planning input.
FFI Standard Reference
This term is defined and applied in Book 1, Section 1.2: The Cash Management Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Cash Runway. https://ffistandard.org/glossary/cash-runway/. 2026.