Stock Market Glossary

Runway

Time remaining until a company runs out of money.

In brief: Time remaining until a company runs out of money.

Meaning in practice

Runway = cash balance divided by monthly burn rate. For shareholders of high-growth, not yet profitable companies, it is the most important risk measure – it determines how strong the company is in negotiating the next capital round.

Context for investors and traders

When analysing a company, this term is meaningful only alongside the business model, industry and development across several reporting periods. One-off effects, accounting choices and the corporate cycle can move individual metrics.

How to use this in practice

A robust assessment looks across several reports: revenue quality, operating margin, investment, debt and cash flow can tell a different story from one metric. Changes in the competitive setting also matter more than an isolated snapshot.

What to keep in mind

Compare companies with suitable peers and check whether one-off effects, buybacks or accounting choices shift the metric. A strong number does not automatically explain a share valuation.

What does Runway mean in simple terms?

Time remaining until a company runs out of money.

When is this term relevant to investors?

Compare the development with earlier reports and relevant peers. Look beyond the absolute number to cash flow, debt and the assumptions behind management guidance.

What should I check before acting on Runway?

Compare companies with suitable peers and check whether one-off effects, buybacks or accounting choices shift the metric. A strong number does not automatically explain a share valuation.

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