SaaS Quick Ratio Calculator
The SaaS quick ratio measures growth efficiency: MRR gained (new + expansion) divided by MRR lost (churn + contraction).
The formula
Quick ratio equals (new MRR + expansion MRR) divided by (churned MRR + contraction MRR). Above 4 is excellent, 2 to 4 is good, below 2 is weak.
FAQ
Why not just track net MRR?+
Two companies with the same net MRR can have very different quick ratios. A 10x rate of gain vs loss is a different business than 1.1x.
Is expansion revenue always good?+
Yes for the ratio, but check whether it comes from price increases or actual usage. Price-driven expansion inflates the ratio without proving product-market fit.
What counts as contraction?+
Any downgrade in ARPU that is not a cancellation: plan downgrades, seat reductions, discount grants.
Should this be a rolling average?+
Yes. A single month can spike from one large customer. A trailing-3-month average is standard.
Does this correlate with valuation?+
Loosely. Investors weight it alongside growth rate, gross margin, and NRR.