Templates

Runway and Cash Budget Template - Excel

An easy way for anyone to model a startup business. The model uses external market data where applicable and estimates when necessary. You should adjust all metrics and inputs to fit your business.

Download Template
This Cash Runway template helps you:
  • Maintain he simplest structure of the base financial models.
  • Create a cost budget, estimate revenues, and understand burn, cash, and runway as quickly as possible.
  • Automatically creates a summary chart of burn and runway, operating expenses, and sources and uses of funds.
About the Burn Rate Template

What is Cash Flow?

Cash flow is a measure of the money coming into and out of a business. It tells you how much cash is available to pay for expenses and fund investments. When cash is coming in faster than it's going out, you have a positive cash flow. On the other hand, when cash is leaving the business more quickly than it's coming in, you have a negative cash flow.

What is Cash Runway?

Cash Runway is an essential financial metric that helps measure a company's ability to provide enough liquidity to sustain operations and meet its obligations. It is calculated by subtracting the total amount of cash outflows from the total amount of cash inflows. The resulting number is how long it would take the company to exhaust its cash reserves if current cash flows continue. This metric is crucial for startups as it helps investors, lenders, and founders determine how much financing they need to keep the business running.

Why is Cash Runway Important?

Cash Runway is an essential tool for assessing a company's financial health and understanding its future prospects. It is also used in the valuations of companies to help investors determine the fair value of a business.
Companies with longer Cash Runways are generally considered to be in better financial shape than those with shorter ones. By assessing Cash Runway, businesses can plan ahead and make necessary adjustments to ensure they have enough capital to continue operations. Business owners should regularly monitor their Cash Runway and adjust their operations and financial strategy accordingly.

Types of Cash Flow Runway

There are two different types of Cash Runway: the Operating Cash Flow Runway and the Total Cash Flow Runway.

Operating Cash Flow Runway

The Operating Cash Flow Runway measures how long a company can sustain operations with its current cash flows.

Total Cash Flow Runway

The Total Cash Flow Runway measures how long a company can support all functions, including debt payments and capital expenditures.

Knowing the Cash Runway is critical in understanding how long a business can last until it needs additional funding. This metric is essential for companies of all sizes and startups, as investors use it to determine the value of a business. By properly managing the Cash Runway, companies can ensure they have enough capital to continue operations and plan for the future.

How to Calculate Cash Runway?

The Cash Runway is calculated by subtracting the total amount of cash outflows from the total amount of cash inflows. The resulting number is the number of months or quarters it would take for the company to exhaust its cash reserves if current cash flows continue.

For example, if a business has $100,000 in cash inflows and $80,000 in cash outflows over the course of a year, its Cash Runway would be 12 months. If the business's current cash flows remain the same, it will have enough money to sustain operations for a year before running out of cash.

What is Burn Rate?

Burn rate is another important financial metric that helps measure the speed at which a company spends its cash reserves. It is calculated by dividing the total monthly operating expenses by the total monthly cash inflows. The resulting number is how much the company is burning through its reserves each month. This metric gives insight into how quickly a company is going through its funds and helps it to plan ahead.

How to Calculate Cash Runway Using Burn Rate?

The Burn Rate can also be used to calculate Cash Runway. The formula is:

Burn Rate Formula

Net Burn Rate = Cash / Monthly Operating Losses
Gross Burn Rate = Cash / Monthly Operating Expenses

For example, if a business has $200,000 in cash and its monthly operating losses are $50,000, its net burn rate would be 4.0 ($200k / $50k). This means the business is burning through its cash reserves at a rate of $4 for every $1 it brings in.

Cash Runway Formula

Cash Runway = Total Cash / Burn Rate

Knowing these numbers can help a business understand how quickly it is burning through its cash reserves and what adjustments it needs to make to ensure it has enough cash to sustain operations.

What Is a Good Cash Runway?

The ideal Cash Runway varies depending on the industry and business model. Generally, companies with longer Cash Runways are considered to be in better financial shape and have more flexibility when making decisions.

A good Cash Runway should be long enough to provide the company with enough time to make decisions, secure additional financing if needed, and adjust operations to improve profitability. Companies should aim for a Cash Runway of at least six months, although longer runways are preferred.

It is important to note that a company's Cash Runway can change over time. Businesses should regularly monitor their Cash Runway and make necessary adjustments to ensure they have enough capital to sustain operations.

What is a Cash Runway Excel Template?

A Cash Runway Excel template is a helpful tool for businesses to track their cash flows and understand their Cash Runway. The template helps companies to calculate their Cash Runway based on their cash inflows and outflows and provides a visual representation of the data.

Using a Cash Runway Excel template can help businesses better understand their financial situation and make informed decisions to ensure that they have enough cash to sustain operations. It is important to note that a business's Cash Runway can change over time, so businesses should regularly monitor their Cash Runway and make necessary adjustments. By understanding their Cash Runway, businesses can better manage their finances and have a better chance of long-term success.

Why Use a Cash Runway Excel Template?

A Cash Runway Excel template is an effective way for businesses to manage their finances. The template helps businesses track their cash flows and understand their Cash Runway. Additionally, the template can be used to track a company's burn rate and make necessary adjustments to improve its Cash Runway.

Using a Cash Runway Excel template provides businesses with the data and insights needed to make informed decisions about their financial situation and ensure that they have enough cash to sustain operations. Having a better understanding of their Cash Runway can help businesses manage their finances more effectively and increase the chances of long-term success.

How to Automate Your FP&A on Top of Google Sheets?

Layer is an add-on that equips finance teams with the tools to increase efficiency and data quality in their FP&A processes on top of Google Sheets. Share parts of your Google Sheets, monitor, review and approve changes, and sync data from different sources – all within seconds. See how it works.

Using Layer, you can:

  • Share & Collaborate: Automate your data collection and validation through user controls.
  • Automate & Schedule: Schedule recurring data collection and distribution tasks.
  • Integrate & Sync: Connect to your tech stack and sync all your data in one place.
  • Visualize & Report: Generate and share reports with real-time data and actionable decisions.

Limited Time Offer: Install the Layer Google Sheets Add-On today and Get Free Access to all the paid features, so you can start managing, automating, and scaling your FP&A processes on top of Google Sheets!

Layer Google Sheets Add On
Get Started With Layer Today!

Share parts of your Google Sheets, monitor, review and approve changes, and sync data from different sources – all within seconds.

GET STARTED FOR FREE

How to Use the Runway and Cash Budget Template?

  1. 1. Any number in blue with a grey-shaded background is an input (i.e., an assumption or data point that can be changed), and anything in black is the result of a formula. Change blue at will and change anything in black with caution.
  2. 2. All cells and formulas are unlocked so that you can make edits as needed and completely understand what is going on.
  3. 3. All assumptions are illustrative only, do not assume they are market data or standard.
  4. 4. As with all templates, feel free to create your own model from scratch, using this as a guide.
  5. 5. The model is constructed to fit a wide variety of businesses, and therefore, some sections may or may not be relevant to yours. I have grouped together sections on all sheets so that you can review different sections and see all the possibilities, but also easily hide the sections not relevant to you. Simply click on the "+" button on the left-hand side to unhide a section, and click on the "-" button to hide it.

Visit Foresight to get more instructions and videos on how to use the model.

Conclusion

Cash Runway is an essential financial metric that helps measure a company's ability to sustain operations and meet its obligations. It is vital for startups, investors, lenders, and founders alike as it helps them better understand a company's financial health and future prospects. By regularly monitoring Cash Runway, businesses can plan ahead and make necessary adjustments to ensure they have enough capital to continue operations.

Frequently Asked Questions (FAQs)
Is this actually free?

Yes! This is absolutely free for you to download and use.

Why should I fill out my information?

We will always keep your personal information safe.

We will not, in any circumstances, share your personal information with other individuals or organizations. We ask for your information in exchange for valuable resources in order to improve your browsing experience and send you communications that we think would be valuable to you. You can read more about our privacy policy.

Download and start using the Cash Runway template today!