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The SaaS Quick Ratio measures the quality of your growth. Coined by Mamoon Hamid at Kleiner Perkins, it asks: for every dollar of MRR you lose, how many dollars of new MRR are you generating?
The formula
Quick Ratio = (New MRR + Expansion MRR) / (Contraction MRR + Churned MRR)
A company adding $50k new MRR and $15k expansion MRR, while losing $5k to contraction and $10k to churn, has a Quick Ratio of 65/15 = 4.3x — exceptional.
Why Quick Ratio matters more than gross growth
Two companies can have identical gross MRR growth rates but very different quick ratios. A company at 30% gross MRR growth with 20% churn has a Quick Ratio of ~1.5x — the churn is eating most of the growth. Another company at 30% gross growth with 5% churn has a Quick Ratio of ~6x — a fundamentally healthier business.
Investors use Quick Ratio to separate genuine growth from "running on a treadmill."
Benchmarks
| Quick Ratio | Assessment |
|---|---|
| > 4x | Exceptional — world-class SaaS growth quality |
| 2–4x | Healthy — fundable, investable growth |
| 1–2x | Marginal — growing faster than losing, but barely |
| < 1x | Declining — losing more MRR than gaining |
Quick Ratio vs NRR vs Burn Multiple
- NRR (Net Revenue Retention): % of last year's ARR you still have + expansion. Excludes new logos (SaaS shorthand for new customer accounts).
- Quick Ratio: Growth MRR / lost MRR. Includes new logos. Measures acquisition + retention together.
- Burn Multiple: Net burn / net new ARR. Measures capital efficiency of all that growth.
The Quick Ratio is the best single metric for measuring the quality of your MRR growth. A high Quick Ratio with a good Burn Multiple and high NRR signals a capital-efficient, sticky, growing SaaS business — the trifecta investors want to see.
How to improve your Quick Ratio
- Expand existing accounts — expansion MRR costs 3–7x less than acquiring new logos
- Reduce logo churn — one churn prevention saves as much as one new acquisition
- Segment your churn — identify which cohorts churn most and fix the onboarding for them
- Build expansion loops — usage-based pricing, seat expansion, and add-on modules all drive expansion MRR
- Increase new MRR — growth always helps, but retention improvements have compounding effects
Frequently asked questions
What does this calculator do? Calculate your SaaS Quick Ratio from monthly MRR movements to measure the quality and sustainability of your revenue growth.