New: How to calculate your runway using Jirav's cash flow forecasts
For growing businesses, monitoring runway — the amount of time until your startup runs out of cash — is essential.
This metric helps founders make critical decisions and is an important feedback loop when budgeting and forecasting.
The challenge is, there are a few different ways to calculate runway. If you use the wrong one, you could make a fatal error. Now in Jirav you can define and visualize runway in multiple ways, and pick the one that makes the most sense for your business.
This example shows three different ways a company can think about their runway.
- The first looks at the current cash on hand and divides it by the Operating Cash Flow (OCF) over the past 6 months. This OCF value comes from the fully customizable Indirect Cash Flow Statement report within Jirav. This approach shows us how many months of runway we have left based only on historical burn without accounting for any planned changes we expect in the future.
- The second one is similar to above. Except it now looks at the forecasted Operating Cash Flow (OCF) over the future 12 months. This is more accurate as it accounts for planned expenses such as new hires that are not anticipated by historical figures.
- The third one is the standard calculation which is the default in Jirav. It simply looks at current total cash and divides it by the Change in Cash. This is a very broad calculation that may not always be accurate at all times — especially for companies that have Investing Cash Flows and Financing Cash Flows that are usually not ongoing.
Any of the assumptions above in any of the calculations can be changed. We can look at the average of 12 months, or the max of 3 months, or any other period and aggregation rule over that period.
You can choose which one you want to use, or you can even track them all at the same time. It's all possible. And fully customizable.
Here's a look at how to set up your runway in Jirav:
It's that easy!
Care to try cash flow forecasting in Jirav? Start a free trial today.