How to Calculate Burn Rate and Cash Runway in Excel

Burn rate is how much cash a business uses each month, and cash runway is how many months its cash would last at that pace. In Excel, you total cash in and cash out per month, take the difference as net burn, average the last few months, and divide the cash balance by that average. This guide is for founders, analysts and students who want to set up the calculation cleanly. All figures are examples, with the arithmetic checked in Python, and nothing here is financial advice.

What burn rate and runway mean#

There are two kinds of burn rate, and runway builds on them:

Net burn gives the realistic picture, because most businesses have some income. Gross burn shows the worst case: how long the cash would last if all income stopped. Both use cash that actually moved, not invoices that haven't been paid yet.

Runway is an estimate, not a deadline. It assumes the next months look like the recent ones. That is why the sheet below keeps every step visible: the monthly totals, the net burn, the average and the final division. Anyone who reads it can see where the number came from and change one input to test a different view.

Step 1: get monthly cash in and cash out with SUMIFS#

If your data is a list of transactions, SUMIFS turns it into monthly totals. Say a sheet called Bank has the date in column A, the type ("In" or "Out") in column B and the amount in column C. With the first day of each month in column A of your summary, use:

B2: =SUMIFS(Bank!$C$2:$C$2000,Bank!$B$2:$B$2000,"In",Bank!$A$2:$A$2000,">="&A2,Bank!$A$2:$A$2000,"<="&EOMONTH(A2,0))

Copy it to column C and change "In" to "Out". The two date conditions keep only transactions from the first to the last day of the month, and EOMONTH returns that last day. The SUMIFS function guide explains each argument, and the guide to summing by month covers the date conditions in more detail.

The result for six example months:

Step 2: calculate net burn for each month#

Net burn is a simple subtraction. In D2, type =C2-B2 and fill down (Windows: Ctrl+D; Mac: ⌘D). A positive number means the business used more cash than it received that month.

Look at the column before you average it. Here net burn rose from about 43,000 to 47,000, because spending grew faster than income. That trend matters as much as the average itself. If you track costs by category, a monthly budget sheet helps explain where the extra spending came from.

Step 3: average the burn with AVERAGE#

One month can be unusual, with a yearly bill or a big customer payment, so most people average the last three months. In G3:

=AVERAGE(D5:D7)

The result is 45,000 ((44,000 + 44,000 + 47,000) / 3). Over all six months, =AVERAGE(D2:D7) gives about 44,167. The three-month figure is higher because burn is rising, and it is the more cautious number to use. The AVERAGE function guide and the article on AVERAGE, MIN and MAX cover the function, and a moving average shows how the three-month figure changes over time.

Step 4: calculate runway from the cash balance#

Runway is the cash balance divided by average net burn. Type the cash in the bank at the end of December, 540,000, in G1. Then in G2:

=G1/AVERAGE(D5:D7)

The result is 12 months. You can also skip the Net burn column and calculate it in one formula:

=G1/(AVERAGE(C5:C7)-AVERAGE(B5:B7))

That is 540,000 / (68,000 − 23,000) = 12. The brackets matter: without them, Excel divides first and subtracts second. For the worst case, use gross burn: =G1/AVERAGE(C5:C7) gives about 7.9 months.

Step 5: turn runway into a date#

A date is easier to talk about than "12 months". EDATE adds a number of whole months to a date:

=EDATE(DATE(2026,12,31),INT(G2))

With a runway of 12, this returns 31 Dec 2027. INT drops any part month, so the date stays on the cautious side. Format the cell as a date if Excel shows a number.

If net burn is zero or negative, the business took in at least as much as it spent, and runway has no meaning. Guard the formula with IF:

=IF(AVERAGE(D5:D7)<=0,"Cash-flow positive",G1/AVERAGE(D5:D7))

Common burn rate mistakes#

Small set-up errors can change runway by months. Watch for these:

1. Using profit instead of cash. Profit includes items that are not cash, and invoices that are not yet paid. Burn rate uses bank movements.
2. Counting transfers between your own accounts. Moving money from savings to the current account is not cash in. Exclude it with an extra SUMIFS condition.
3. Averaging too few or too many months. One month is noisy; twelve months can hide a recent rise.
4. Ignoring the trend. If burn grows every month, runway based on the average is too optimistic. A cash flow forecast projects month by month instead.
5. Missing brackets in the one-formula version, so Excel divides before it subtracts.

Practise it#

Burn rate and runway are built from sums, subtractions and averages, the core of any budgeting task in a job test. Practise arithmetic formulas on a department budget, then practise AVERAGE, MIN and MAX in a live spreadsheet. ExcelReady checks each formula as you type. Start with the runway exercise on this page.