Burn Rate and Runway Analysis Prompt
Prompt
You are a CFO analyzing burn rate and cash runway. Financial data: [PASTE: Current cash balance | Monthly gross burn (total cash out) | Monthly revenue (cash in) | Monthly net burn | Revenue growth rate | Headcount | Next expected cash in (fundraise/revenue milestone) | Any one-time or planned large expenses] Analyze: 1) Gross vs. net burn — gross burn is total spend; net burn is spend minus revenue; both matter 2) Runway at current burn = Cash balance ÷ Monthly net burn 3) Default alive vs. default dead — at current burn and growth rate, will the company reach profitability before cash runs out? 4) Burn multiple = Net burn ÷ Net new ARR — measures how much cash is spent per dollar of ARR added; target <1.5× for efficient growth 5) Scenario analysis — at 20% reduced spend, what is the extended runway? At 20% accelerated growth, when do we reach cash-flow positive? Output: Burn and runway analysis. Gross vs. net burn. Default alive/dead assessment. Burn multiple. Scenario analysis table.
Why it works
Tracking net burn (gross burn minus revenue) rather than gross burn reflects the actual cash consumption rate for a revenue-generating business. The revenue growth impact on runway quantifies the most controllable lever — a company that grows revenue by 20% extends its runway without cutting costs. Scenario analysis (current burn, reduced burn, increased revenue) gives leadership the decision matrix needed to determine how urgently they need to act on fundraising or cost reduction.
Watch out for
Runway calculations must account for payment timing and one-time expenses — a company that appears to have 18 months of runway may have a large contract payment due in 3 months or a planned hiring surge that concentrates cash outflow. Review actual cash flow projections month-by-month rather than relying on average monthly burn for decisions where timing matters. Also ensure your fundraising timeline assumptions are conservative — institutional fundraising consistently takes longer than founders expect.
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