Definition
A growth efficiency ratio comparing revenue gained to revenue lost in a period.
Formula
(New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
How to measure
Sum new and expansion MRR for the period, then divide by the sum of churned and contraction MRR for that same period.
Why track it
A quick ratio above 4 is often considered healthy, showing revenue gained substantially outpaces revenue lost; below 1 means the business is shrinking.
Example
A company adding $50,000 in new and expansion MRR against $8,000 in churn and contraction reports a quick ratio of 6.25.
FAQ
- What is SaaS Quick Ratio?
- A growth efficiency ratio comparing revenue gained to revenue lost in a period.
- How do you calculate SaaS Quick Ratio?
- (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
- Why track SaaS Quick Ratio?
- A quick ratio above 4 is often considered healthy, showing revenue gained substantially outpaces revenue lost; below 1 means the business is shrinking.