SaaS Quick Ratio Calculator

Measure your SaaS company's growth efficiency. The Quick Ratio compares your revenue growth (new + expansion MRR) to your revenue loss (churn + contraction MRR).

(Revenue from new customers)
$
(Upgrades, cross-sells)
$
(Revenue lost from cancellations)
$
(Revenue lost from downgrades)
$

SaaS Quick Ratio

5.0

Excellent growth efficiency!

Gained MRR ($15,000) / Lost MRR ($3,000)

Understanding the SaaS Quick Ratio

The SaaS Quick Ratio is a key metric for evaluating a SaaS company's growth efficiency. It measures how effectively a company is growing its recurring revenue considering its customer churn and downgrades. A higher ratio indicates more efficient growth.

How is the SaaS Quick Ratio Calculated?

The formula for the SaaS Quick Ratio is:

Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)

Where:

  • New MRR: Monthly Recurring Revenue from new customers acquired in the period.
  • Expansion MRR: Additional MRR from existing customers (upgrades, cross-sells, add-ons) in the period.
  • Churned MRR: MRR lost from customers who canceled their subscriptions in the period.
  • Contraction MRR: MRR lost from existing customers downgrading their subscriptions in the period.

For example, if a company has $10,000 New MRR, $5,000 Expansion MRR, $2,000 Churned MRR, and $1,000 Contraction MRR, the Quick Ratio is: ($10,000 + $5,000) / ($2,000 + $1,000) = $15,000 / $3,000 = 5.0

What is a Good SaaS Quick Ratio?

The interpretation of the Quick Ratio generally falls into these ranges:

  • Quick Ratio > 4: Excellent. Your company is growing efficiently. For every $1 of MRR lost, you are adding more than $4 in new and expansion revenue.
  • Quick Ratio between 1 and 4: Good, but potentially improvable. Your growth is outpacing churn, but there might be room to optimize acquisition, retention, or expansion.
  • Quick Ratio < 1: Problematic. Your company is losing MRR faster than it's gaining it. This indicates significant issues with churn or acquisition/expansion that need urgent attention.

Why is the Quick Ratio Important?

  • Growth Efficiency Insight: Unlike simply looking at Net MRR Growth, the Quick Ratio tells you *how* efficiently that growth is being achieved.
  • Sustainability Check: A low Quick Ratio, even with positive net growth, can signal underlying problems (like high churn) that might hinder long-term sustainability.
  • Investor Perspective: Investors use the Quick Ratio to gauge the health and scalability of a SaaS business model.

Use the calculator above to determine your SaaS Quick Ratio and understand your company's growth efficiency.