CMA Final · Entrepreneurship and Startup · Idea to Action
A founder says her startup will have 6 months of cash left at the current spending level. The monthly net cash outflow is Rs 5 lakh. The cash balance consistent with her statement is:
The cash balance is Rs 30 lakh. Runway is cash divided by monthly net burn, so a six-month runway at Rs 5 lakh burn per month requires 6 multiplied by 5, which equals Rs 30 lakh of cash on hand.
- ARs 11 lakh
- BRs 60 lakh
- CRs 5 lakh
- DRs 30 lakhCorrect
Explanation
Runway equals cash balance divided by monthly net burn. Cash = 6 months x Rs 5 lakh = Rs 30 lakh. Rs 60 lakh would imply a 12-month runway, and Rs 11 lakh wrongly adds months and burn.
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