Source: https://guthlabs.ai/docs/instruments/burn-rate-runway-calculator/mechanism/

instrument mechanism / verified-clean

# Burn Rate & Runway Calculator mechanism

The inspectable method record for Burn Rate & Runway Calculator, kept separate from implementation and qualification.

Status: **VERIFIED_CLEAN**Lifecycle: **verified-clean**

## Model scope

The core burn formula is standard, but the specification is not complete enough for an unambiguous production result. Define behavior for burn<=0, negative cash, direct-net-burn precedence, and zero-cash-date calculation before approval.

- burn=monthly_expenses-monthly_revenue is correct for net cash burn when both inputs are positive monthly cash-flow amounts.

- runway=cash_balance/burn is correct only when burn>0 and cash_balance is nonnegative; burn=0 causes division by zero, while burn<0 indicates cash generation rather than finite runway.

- The zero-cash date has no specified formula, as-of date, calendar-month convention, or treatment of fractional months.

- The alternative input 'net burn directly' is ambiguous because the spec does not define whether it replaces the revenue and expenses inputs or how conflicting values are handled.

## Units and conventions

- Monthly revenue, monthly expenses, and net burn must use the same currency and the same time basis; amounts are assumed to be currency units per month.

- Cash balance is assumed to be a currency amount in the same currency as revenue and expenses, not an annual amount, daily amount, or value in minor units such as cents.

- Runway is measured in months and assumes constant monthly net burn with no seasonality, financing, taxes, one-time costs, or timing effects.

- For the worked date examples, a zero-cash date cannot be calculated from the provided specification because no as-of date or date convention is defined.

## Inspectable vector

One of 4 source-bound review vectors:

````
{
  "inputs": {
    "cash_balance": 180000,
    "monthly_revenue": 20000,
    "monthly_expenses": 50000
  },
  "expected_outputs": {
    "net_burn_per_month": 30000,
    "runway_months": 6,
    "zero_cash_date": null
  },
  "working": "burn = 50,000 - 20,000 = 30,000 currency units/month. runway = 180,000 / 30,000 = 6 months. A zero-cash date cannot be computed because the spec provides no as-of date or date-conversion rule."
}
````

## Failure boundary

**BREAK_CLAIMED** · SELF_FLAGGED

The instrument reaches an undefined division-by-zero result when monthly expenses equal monthly revenue, and its raw formula produces negative runway values for cash-generating cases. Without explicit handling, the UI can show an invalid or misleading runway and zero-cash date.

## Other records

[01**Overview**](<https://guthlabs.ai/docs/instruments/burn-rate-runway-calculator/>)[03**Implementation**](<https://guthlabs.ai/docs/instruments/burn-rate-runway-calculator/implementation/>)[04**Qualification**](<https://guthlabs.ai/docs/instruments/burn-rate-runway-calculator/qualification/>)

## Sources and evidence

These pointers bind the page to evidence. They do not grant authority or collapse verification into deployment.

- `VERIFIED_LEDGER.json`

- `evidence-tranche5/tranche5-results.json`

- `BOUNDARY_HAZARD_CATALOG.json`