SaaS Quick Ratio Calculator
The SaaS Quick Ratio measures growth efficiency by comparing new revenue (New MRR + Expansion MRR) to lost revenue (Churned MRR + Contraction MRR). A higher quick ratio indicates healthier, more efficient growth where you are adding revenue faster than losing it.
How to Calculate
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Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
Example:
New MRR: $50,000
Expansion: $20,000
Churn: $15,000
Contraction: $5,000
Quick Ratio = ($50K + $20K) / ($15K + $5K) = 3.5
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Industry Benchmarks
| Quick Ratio | Health | Growth Efficiency |
|---|---|---|
| <1 | Critical | Shrinking revenue |
| 1-2 | Poor | Struggling growth |
| 2-4 | Good | Healthy growth |
| >4 | Excellent | Efficient scaling |
Interpreting Your Results
A quick ratio of 4 means you add $4 of revenue for every $1 lost. Top SaaS companies maintain quick ratios above 4. If your ratio is below 2, prioritize retention improvements before increasing acquisition spend.
Why This Metric Matters
Understanding SaaS Quick Ratio helps you:
- Make data-driven business decisions with confidence
- Benchmark against industry standards and competitors
- Identify areas for improvement in your business model
- Communicate performance clearly to stakeholders and investors
- Set realistic goals and track progress over time
Best Practices for Accurate Measurement
1. Use consistent time periods: Compare month-over-month or quarter-over-quarter consistently 2. Include all relevant data: Ensure you capture all revenue sources and costs 3. Track cohorts separately: Analyze metrics by customer segment and acquisition date 4. Monitor trends: Single snapshots are less valuable than trends over time 5. Automate tracking: Use analytics tools to ensure consistent, accurate measurement
Every Metric From These Inputs
100 customers at $49 with 3% monthly churn and $200 CAC:
| Metric | Value | Formula |
|---|---|---|
| MRR | $4,900 | customers × ARPU |
| ARR | $58,800 | MRR × 12 |
| Annual churn | 30.6% | 1 − (1 − monthly)¹² |
| Average lifetime | 33.3 months | 1 ÷ monthly churn |
| LTV | $1,633 | ARPU ÷ monthly churn |
| LTV : CAC | 8.2:1 | LTV ÷ CAC |
| CAC payback | 4.1 months | CAC ÷ ARPU |
What Good Looks Like
| Metric | Healthy | Concerning |
|---|---|---|
| Monthly churn (SMB) | Under 3% | Above 5% |
| Monthly churn (enterprise) | Under 1% | Above 2% |
| LTV : CAC | 3:1 or better | Below 1:1 |
| CAC payback | Under 12 months | Above 18 |
| Net revenue retention | Above 100% | Below 90% |
The Metric This Set Omits
Net revenue retention — expansion revenue minus churn and contraction, from existing customers only. Above 100% means the business grows without acquiring anyone, which is the single strongest signal in SaaS and the one that most affects valuation. It cannot be derived from the inputs above because it needs upgrade and downgrade data.