What is Quick Ratio?
The SaaS Quick Ratio measures growth efficiency by comparing how much revenue you're adding versus losing. It's calculated as (New MRR + Expansion MRR) divided by (Churned MRR + Contraction MRR).
A Quick Ratio of 4 means you're adding $4 in new revenue for every $1 you lose. The higher the ratio, the more efficient your growth engine.
Why Quick Ratio Matters
Quick Ratio reveals whether you're growing from a position of strength or desperately trying to outrun a leaky bucket. A company adding $100K but losing $80K is in a very different position than one adding $100K and losing $20K.
Investors love this metric because it shows growth quality, not just growth quantity. High Quick Ratio companies can sustain growth even if new customer acquisition slows.
Quick Ratio Benchmarks
Below 1: Shrinking. You're losing more than you're gaining. 1-2: Struggling growth. Too much energy fighting churn. 2-4: Healthy growth. Good balance. Above 4: Excellent. Very efficient growth engine.
Quick Ratio = (New MRR + Expansion MRR) ÷ (Churned MRR + Contraction MRR)
Higher is better. Aim for 4+ for healthy growth.
Monthly MRR movements:
- New MRR: $25,000
- Expansion MRR: $10,000
- Churned MRR: $6,000
- Contraction MRR: $2,000
Quick Ratio = ($25K + $10K) ÷ ($6K + $2K) = $35K ÷ $8K = 4.4
Excellent ratio. You're adding $4.40 for every $1 lost. Growth is healthy and efficient.