SaaS Quick Ratio Calculator Formula
Understand the math behind the saas quick ratio calculator. Each variable explained with a worked example.
Formulas Used
SaaS Quick Ratio
quick_ratio = (churned_mrr + contraction_mrr) > 0 ? (new_mrr + expansion_mrr) / (churned_mrr + contraction_mrr) : 0Net MRR Change
net_mrr_change = (new_mrr + expansion_mrr) - (churned_mrr + contraction_mrr)Variables
| Variable | Description | Default |
|---|---|---|
new_mrr | New MRR (new customers)(USD) | 25000 |
expansion_mrr | Expansion MRR (upgrades)(USD) | 10000 |
churned_mrr | Churned MRR (cancellations)(USD) | 8000 |
contraction_mrr | Contraction MRR (downgrades)(USD) | 4000 |
How It Works
How to Calculate the SaaS Quick Ratio
Formula
SaaS Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
Not to be confused with the accounting quick ratio, the SaaS Quick Ratio (coined by Mamoon Hamid) measures the quality of your revenue growth. A ratio of 4.0 means you add $4 for every $1 lost. Higher ratios indicate sustainable, high-quality growth because you are not just adding revenue to replace what leaks out.
Worked Example
A company adds $25,000 in new MRR and $10,000 in expansion, while losing $8,000 to churn and $4,000 to contraction.
new_mrr = 25000expansion_mrr = 10000churned_mrr = 8000contraction_mrr = 4000
- 01MRR Gains = $25,000 + $10,000 = $35,000
- 02MRR Losses = $8,000 + $4,000 = $12,000
- 03SaaS Quick Ratio = $35,000 / $12,000 = 2.92
- 04Net MRR Change = $35,000 - $12,000 = +$23,000
Ready to run the numbers?
Open SaaS Quick Ratio Calculator