Question

regarding accounting, what does the runway indicate?
the monetary value of current assets divided by current liabilities
the cash spent on expenses that are not offset by gross sales
how long a business can operate before it must generate new revenue

Explanation:

• The first option describes the current ratio (current assets/current liabilities), not runway.
• The second option refers to burn rate (cash spent on non - revenue - offsetting expenses), not runway.
• Runway in accounting/startup finance context is the time a business can operate with its available cash (or resources) before needing new revenue.

Answer:

C. how long a business can operate before it must generate new revenue (assuming the options are labeled A, B, C for the three options in order: first option A, second B, third C)