Cash flow and runway explained

Updated July 18, 2026

Cash is what keeps the company alive, and it is not the same as profit. Adlega models your cash separately so you always know how long you can operate.

Why cash ≠ profit

Your P&L can show a profit while your bank balance falls, or the reverse. Timing is the reason: annual prepayments bring cash in early, net-60 terms delay it, and hiring or funding events move large amounts that never appear on a single P&L line. That is why a model needs a real cash flow statement, not just a profit forecast.

The cash flow statement

The Operating Model view shows cash flow in three parts:

Operating — cash generated or consumed by running the business.
Investing — capital expenditure and asset purchases.
Financing — debt draw-downs, loan repayments and equity raises.

These combine with your starting cash to produce a running cash balance for every month.

Burn rate and runway

Gross burn — total cash you spend each month.
Net burn — spend minus revenue; the true monthly drain.
Runway — how many months of cash you have left at your current net burn.

Runway is the single most important survival number for an early-stage company. When you change any assumption — a hire, more ad spend, a price change — watch what it does to runway.

A common rule of thumb: raise or reach profitability well before runway runs out, because a raise itself takes months. Use what-if mode to see how long your cash lasts under a downside case, not just the base case.

Related reading: cash runway and burn rate. You can also try the free runway calculator.