SaaS Quick Ratio
The ratio of revenue inflows (new MRR + expansion MRR) to revenue outflows (churned MRR + contraction MRR). Measures how efficiently you are growing relative to the revenue you are losing.
Quick Ratio: Growth Efficiency in One Number
The SaaS quick ratio puts growth and loss side by side. It answers: for every dollar you lose, how many do you add? A quick ratio of 4 means for every $1 that churns, you add $4 in new and expansion revenue. That is healthy growth. A quick ratio of 1.5 means you are barely outrunning your losses.
The Formula
Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
Higher is better. But how you get there matters. A quick ratio of 5 driven entirely by new customer acquisition is more expensive to maintain than a quick ratio of 5 with strong expansion. The composition tells you about sustainability.
Diagnosing Problems With Quick Ratio
If your quick ratio is declining, one of four things is happening: new customer acquisition is slowing, expansion is flatlining, churn is increasing, or contraction is growing. Break the ratio into its components and identify which lever is moving in the wrong direction. That tells you exactly where to invest.
Frequently Asked Questions
How do you calculate SaaS quick ratio?
SaaS Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR). If you added $100K in new MRR and $30K in expansion, while losing $25K to churn and $5K to contraction, your quick ratio is $130K / $30K = 4.3. A ratio above 4.0 is considered healthy.
What is a good SaaS quick ratio?
Above 4.0 is healthy — you are adding $4 for every $1 you lose. 2.0-4.0 is acceptable but shows room for improvement. Below 2.0 is concerning — you are adding less than $2 for every $1 lost. Below 1.0 means you are shrinking.
