Xero Metric
Accounting
Cash Runway (months) = Cash Balance / Monthly Net Burn
Cash runway measures how many months the business can continue operating at its current net burn rate before cash runs out. It is the single most important survival metric for any business spending more than it earns.
Full guide: definition, formula, and benchmarksXeroAccountingCash Runway
Cash runway measures how many months the business can continue operating at its current net burn rate before cash runs out. It is the single most important survival metric for any business spending more than it earns.
How to calculate cash runway
Why cash runway matters for Xero users
Runway converts every other financial decision into a concrete choice: how much to hire, how much to spend, how fast to grow. A shortening runway is a forcing function. A lengthening runway is optionality. Either way, it should be the most-watched number in the business for any company not yet cash-flow positive.
Xero users get runway calculated directly from their actual bank balance and trailing spend, without a separate spreadsheet model to maintain.
Understand and act on cash runway with KPI Tree
Query the Xero MCP bank summary and profit and loss tools, or sync your Xero bank accounts and expense accounts into your warehouse, and let KPI Tree compute runway from the live cash balance and a rolling trailing burn rate. Link it causally to burn rate, gross profit margin, and operating cash flow so runway changes are always traceable to their drivers.
Assign ownership to the CFO or CEO and configure alerts at runway thresholds (18, 12, 9, 6 months) so leadership has time to react.
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Related Xero metrics
Burn Rate
AccountingMetric Definition
Net Burn Rate = Monthly Cash Outflows − Monthly Cash Inflows
Burn rate measures the net cash consumed by the business each month, calculated as the difference between cash outflows and cash inflows. Gross burn is total monthly spend; net burn is gross burn minus any revenue collected.
Operating Cash Flow
AccountingMetric Definition
Operating cash flow measures the cash generated (or consumed) by the core trading activity of the business over a period. Unlike profit, it is not distorted by accruals, non-cash items, or timing of invoices.
Expense-to-Revenue Ratio
AccountingMetric Definition
Expense-to-Revenue Ratio = Operating Expenses / Total Revenue
Expense-to-revenue ratio measures total operating expenses as a percentage of total revenue over the same period. It is a single-number summary of how operationally efficient the business is at each level of revenue.
Gross Profit Margin
AccountingMetric Definition
Gross Profit Margin = (Revenue − COGS) / Revenue
Gross profit margin is the percentage of revenue left after subtracting the cost of goods sold. It shows how efficiently your business produces and delivers what it sells.
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