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Out of Cash Date

Last updated: Mar 07, 2024

What is Out of Cash Date? 

Out of Cash Date gives you a rough estimate of when you will be out of cash. This metric is most often expressed as the number of months before Cash Out. This is a useful metric for CEOs and CFOs who are managing companies that are not profitable yet.

Alternate names: Cash Runway, Zero Cash Date

Out of Cash Date Formula

ƒ (Cash
Description: Cash and Cash Equivalents refers to legal tender of any form including cash, currencies, and other liquid assets such as money market assets and accounts receivable. Cash is a key indicator of business health, indicating a company’s ability to meet its operating obligations, including paying any short-term debt.
) / (Net Burn
Description: Net Burn, often referred to as Burn Rate, is the amount a company is losing per month as they burn through their cash reserves. It occurs when a company’s operating costs are higher than their revenue. A company that is profitable and generating cash has a "negative Net Burn".
)

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What is a good Out of Cash Date benchmark?

For venture backed, growth oriented companies, Out of Cash Date is often between 9 and 24 months.

How to visualize Out of Cash Date?

Use a summary chart to visualize your Out of Cash Date and compare it to a previous time period.

Out of Cash Date visualization example

Out of Cash Date

15 months

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1.10

vs previous period

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Summary Chart

Here's an example of how to visualize your current Out of Cash Date data in comparison to a previous time period or date range.
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Out of Cash Date

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Measuring Out of Cash Date

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More about Out of Cash Date

Out of Cash Date is a simple predictive metric that should be top of mind for any CEO or CFO in charge of a company that is not cash flow positive. A business needs to fundraise, exit, or become profitable before the Out of Cash Date. The Out of Cash Date is a rough estimate, as it assumes Net Burn will not change in the future, but it’s still a useful gauge to monitor.

Especially if you are a venture backed company, if your Cash Out Date is too far in the future, you may not be using your capital aggressively enough to grow the business. However, anytime your Out of Cash Date dips below 12 months, you should should either be in fundraising mode, or be looking at ways to conserve cash.

Recommended resources related to Out of Cash Date

Here is a short article from Geckoboard about Cash Runway.

Contributor

Pablo SrugoPablo Srugo
Pablo SrugoSeed VC

Metrics related to Out of Cash Date

Net BurnEarnings Before Interest, Taxes, Depreciation, and AmortizationNet Profit

Related Tags

Finance
Chief Financial Officer
Financial Analyst
Controller