How To Calculate Runway in Kinetic | Arithmix

Calculating runway in Kinetic can seem like a daunting task, but it's actually quite simple once you understand the basics. In this article, we'll cover everything you need to know about calculating runway in Kinetic, including what it is, when it's valuable to calculate, and how to do it.

What Is Runway?

Runway is a term used in finance to describe the amount of time a company can continue operating before it runs out of cash. It's essentially a measure of a company's financial health and sustainability. Runway is calculated by dividing a company's cash balance by its monthly burn rate, which is the amount of money the company spends each month on operating expenses.

For example, if a company has $1 million in cash and its monthly burn rate is $100,000, its runway would be 10 months. This means the company has 10 months before it runs out of cash and needs to raise more money or cut expenses.

When Is It Valuable To Calculate Runway?

Calculating runway is valuable for both startups and established companies. For startups, it's important to know how much time they have before they need to raise more money or generate revenue. This can help them plan their fundraising efforts and make strategic decisions about their business.

For established companies, calculating runway can help them identify potential cash flow issues and make adjustments to their business operations. It can also be useful for investors and lenders who want to assess the financial health and sustainability of a company before investing or lending money.

How To Calculate Runway

Calculating runway is a simple process that involves two key pieces of information: a company's cash balance and its monthly burn rate. To calculate runway, simply divide the cash balance by the monthly burn rate.

Here's an example:

Company XYZ has a cash balance of $500,000 and a monthly burn rate of $50,000. To calculate its runway, we would divide $500,000 by $50,000, which equals 10. This means Company XYZ has 10 months of runway before it runs out of cash.

It's important to note that runway is just one measure of a company's financial health and sustainability. Other factors, such as revenue growth, profit margins, and market share, should also be considered when assessing a company's overall financial performance.

In conclusion, calculating runway in Kinetic is a valuable tool for assessing a company's financial health and sustainability. By understanding what runway is, when it's valuable to calculate, and how to do it, you can make informed decisions about your business and investments.

How Do You Calculate Runway in Kinetic

Kinetic 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 Kinetic 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 Kinetic, 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 Kinetic 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 Kinetic 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.