How To Calculate Runway in Acumatica | Arithmix

Calculating runway is an important task for any business owner or entrepreneur. It helps you determine how long your company can continue to operate before running out of cash. This is a critical metric for any business, as it allows you to plan for the future and make informed decisions about your finances. In this article, we will discuss what runway is, when it is valuable to calculate it, and how to calculate it.

What Is Runway?

Runway is the amount of time that a company can continue to operate before running out of cash. It is calculated by dividing the company's cash balance by its monthly burn rate. The burn rate is the amount of money that a company spends each month on operating expenses, such as salaries, rent, and utilities. Runway is a critical metric for any business, as it helps you determine how long you can continue to operate before you need to raise additional funds or generate more revenue.

For example, if a company has $100,000 in cash and its monthly burn rate is $10,000, its runway would be 10 months. This means that the company can continue to operate for 10 months before running out of cash.

When Is It Valuable To Calculate Runway?

It is valuable to calculate runway at any stage of your business, but it is especially important for startups and early-stage companies. These companies typically have limited cash reserves and are still working to generate revenue. Calculating runway helps these companies plan for the future and make informed decisions about their finances.

Runway is also valuable for established companies that are experiencing financial difficulties or are considering a major expansion. By calculating runway, these companies can determine how much time they have to turn things around or generate additional revenue before running out of cash.

How To Calculate Runway

To calculate runway, you need to know your company's cash balance and monthly burn rate. Your cash balance is the amount of money that you have in the bank, while your monthly burn rate is the amount of money that you spend each month on operating expenses.

Once you have these two numbers, you can calculate your runway by dividing your cash balance by your monthly burn rate. For example, if your cash balance is $100,000 and your monthly burn rate is $10,000, your runway would be 10 months.

It is important to note that your monthly burn rate can change over time, so it is important to recalculate your runway on a regular basis. Additionally, if you are planning a major expansion or are experiencing financial difficulties, you may need to adjust your runway calculation to account for these changes.

In conclusion, calculating runway is an important task for any business owner or entrepreneur. It helps you determine how long your company can continue to operate before running out of cash, which is a critical metric for any business. By following the steps outlined in this article, you can calculate your company's runway and make informed decisions about your finances.

How Do You Calculate Runway in Acumatica

Acumatica itself isn’t naturally geared towards letting you calculate complex metrics like Runway. As an alternative, teams typically use products like Arithmix to import data from Acumatica and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Acumatica, combine it with data from other systems, and create calculations like Runway.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Runway in Arithmix

Calculating metrics like Runway is simple in Arithmix. Once you've created your free account, you’ll be able to import your Acumatica data, and use it to create natural language formulas for metrics like Runway.

Arithmix is designed to give you the power to build any calculations you want on top of your Acumatica data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.