Question

in accounting, which of the following best describes the runway?
the net income multiplied by the price-to-earnings ratio
the cash in the bank divided by the burn rate
the total revenue divided by the number of employees

Explanation:

In accounting (specifically for startups/financial analysis), "runway" refers to how long a company can operate before running out of cash. It is calculated as the available cash (cash in the bank) divided by the burn rate (the rate at which cash is being spent). The first option relates to market capitalization (net income × P/E ratio), and the third is revenue per employee, neither of which define runway.

Answer:

the cash in the bank divided by the burn rate