About the SaaS Quick Ratio Calculator
The SaaS quick ratio compares the recurring revenue you gain in a period with the recurring revenue you lose. Enter new MRR from new customers, expansion MRR from upgrades, contraction MRR from downgrades and churned MRR from cancellations, and the calculator returns the quick ratio, a rating, net new MRR and the growth rate on your starting MRR.
The metric was popularised by investor Mamoon Hamid as a fast way to judge the quality of growth. Two companies can add the same net new MRR, but the one that does it with little churn is far healthier than one refilling a leaky bucket. Founders use it in board decks, and investors use it to compare growth efficiency across startups at similar stages.
Use figures from the same month or quarter. A ratio of 4 or more is generally considered excellent for an early-stage SaaS company; below 1 means MRR is shrinking. Mature companies with a large base naturally drift lower because absolute churn grows with the customer base.
With the default inputs, the saas quick ratio is 3.25. Change any value above to recalculate instantly.
How to use the saas quick ratio calculator
- 1Pull new, expansion, contraction and churned MRR for one month or quarter from your billing system.
- 2Enter each figure as a positive amount.
- 3Add MRR at the start of the period to see growth and churn rates.
- 4Read the quick ratio and rating; above 4 is excellent for an early-stage company.
- 5Use the notes to see how much extra growth or lower churn would reach a ratio of 4.
Formula and method
The numerator is all recurring revenue added in the period: new customers plus expansion from existing customers. The denominator is all recurring revenue lost: cancellations plus downgrades. A ratio of 1 means you are standing still; every point above 1 is growth the business keeps.
Growth rate divides net new MRR by MRR at the start of the period, and gross MRR churn divides churned plus contraction MRR by the same starting figure. Rating bands follow the common venture rule of thumb: under 1 shrinking, 1–2 weak, 2–4 healthy and 4 or more excellent. Reactivations can be counted as new MRR.
- New MRR
- Monthly recurring revenue from new customers
- Expansion MRR
- Upsells, cross-sells and price increases on existing accounts
- Contraction MRR
- Downgrades from customers who did not cancel
- Churned MRR
- Recurring revenue lost from cancelled customers
Worked examples
Growing Series A SaaS
The company gained $65,000 of MRR ($50,000 new + $15,000 expansion) and lost $20,000 ($5,000 contraction + $15,000 churn). 65,000 ÷ 20,000 = 3.25, a healthy ratio. Net new MRR of $45,000 is 9% growth on $500,000.
Leaky bucket that is standing still
Gains of $25,000 exactly match losses of $25,000, so the quick ratio is 1.0 and MRR does not grow. Gross churn of 6.25% a month means sales must replace a large share of revenue just to stand still.
Efficient growth with strong expansion
Adding $120,000 while losing only $15,000 gives a quick ratio of 8. Net new MRR is $105,000, or 10.5% growth on a $1M base in the period.
Frequently asked questions
What is a good SaaS quick ratio?+
A ratio of 4 or more is widely treated as excellent for early-stage SaaS, meaning you add $4 of MRR for every $1 lost. Between 2 and 4 is healthy, 1–2 suggests churn is eating growth, and below 1 means MRR is shrinking.
How is the SaaS quick ratio different from the accounting quick ratio?+
The accounting quick ratio measures liquidity: liquid assets divided by current liabilities. The SaaS quick ratio has nothing to do with the balance sheet; it measures growth efficiency by comparing MRR gained with MRR lost.
Should I use monthly or quarterly figures?+
Either works as long as all four inputs cover the same period. Monthly ratios are noisy for small companies, so many teams report a trailing three-month or quarterly quick ratio alongside the monthly figure.
Why does the quick ratio fall as a company grows?+
Churn is a percentage of an ever-larger base, so absolute churned MRR grows each year while new MRR may not keep pace. Large public SaaS companies often run quick ratios closer to 2, which is still healthy at scale.
Do reactivated customers count as new MRR?+
Most teams count reactivations either as new MRR or as a separate line that sits in the numerator. What matters is consistency, so the ratio is comparable from one period to the next.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.