Cash-Out Months (Cash Burn)
Number of months until a company's cash reserves are fully depleted at its current monthly cash burn, assuming no new funding and no change in spend.
◆ Months
Formula
Built from
What it measures
The count of full months a business can keep operating before its unrestricted cash hits zero, found by dividing cash on hand by the monthly cash burn rate. It answers a single survival question: if spend continues at today's pace and no new money arrives, how many months are left? The result is a number of months — the depleted calendar month (the "cash-out date") is then read off by counting that many months forward from today.
Why it matters
Cash-out months is the most urgent survival metric for a capital-constrained business. It converts an abstract ratio into a concrete countdown to the day the bank balance reaches zero, which is the moment payroll, vendors, and the lights all stop. Founders use it to decide when a raise must close, when to freeze hiring, and how aggressively to cut. Investors and boards ask for it first, because it signals how much time the company actually has to prove its model or secure the next round.
How to read it
Read this as a hard ceiling on the time you have to reach breakeven or close your next round, and watch the trend, not just the level. Fewer than 6–12 months means a raise or cost action should already be in motion; beyond 24 months you have room to experiment. Two companies can both show 10 months and face completely different risk: one with burn that is falling as revenue ramps is improving toward safety, while one with flat or rising burn is on a fixed countdown. Always pair this number with the direction of burn and your evidenced path to revenue or profitability, and recalculate every month-close — small moves in either cash or burn shift the date sharply.
What good looks like
Good
More than 24 months of cash-out runway, with cash and burn both tracked and either stable or improving month over month.
Watch
12–18 months of cash-out runway, with board visibility and a documented path to the next round or to profitability.
Bad
Under 6–12 months of cash-out runway, with no active raise, no clear path to breakeven, and burn accelerating.
Watch-outs
- Treating the number as fixed fate. Burn moves with hiring, launches, cost cuts, and revenue ramps, so the cash-out date moves with it. Recalculate every month and track the trend, not one snapshot.
- Dividing by a single month's burn. One unusual month — a tax payment, an annual software renewal, a marketing spike — distorts the rate. Average burn over a full quarter or year to capture the true run-rate.
- Confusing cash burn with operating loss. Non-cash charges like depreciation, stock compensation, and impairment hit the P&L but not the bank account, and only actual cash outflows shorten this countdown.
- Counting money you don't have yet. Restricted cash, a signed term sheet, an investor's verbal commitment, or expected receivables are not spendable cash. Base the headline number on unrestricted money already in the account, and use everything else for scenario planning only.
Worked example
Hypothetical
It is June 2026. The company holds $1.5M of unrestricted cash and burns $150K of cash per month. Cash-out months is $1.5M ÷ $150K = 10 months, so the bank balance is on track to reach zero in April 2027. A funding round, a path to breakeven, or a cost cut needs to land before then.