SaaS Quick Ratio Calculator

How to calculate the SaaS quick ratio

The SaaS quick ratio compares the recurring revenue you add in a period with the recurring revenue you lose. Mamoon Hamid, then a partner at Social+Capital, presented it at SaaStr Annual 2015 as a quick test of whether a company's growth is efficient. Three steps:

1. Add up MRR gained: new MRR from new customers, expansion MRR from existing customers and, optionally, reactivation MRR from customers who came back.
2. Add up MRR lost: churned MRR from cancellations (MRR churn) and contraction MRR from downgrades.
3. Divide gained by lost.

The classic version, as written up by ChartMogul and The SaaS CFO, uses only new and expansion MRR on top. Reactivation is also revenue coming in, so this calculator counts it when you enter it. Leave the field empty to get the classic ratio, which is also how GrowPanel's Quick Ratio report calculates it.

Worked example

In one month a SaaS company records these MRR movements:

• MRR added: $12,000 new + $4,000 expansion + $1,000 reactivation = $17,000
• MRR lost: $3,500 churned + $1,000 contraction = $4,500
• Quick ratio: $17,000 / $4,500 = 3.78
• Net new MRR: $17,000 - $4,500 = $12,500
• Classic ratio without reactivation: $16,000 / $4,500 = 3.56

The company is growing well, but just below 4. To reach 4 with the same losses it would need $18,000 of added MRR, or it could keep adding $17,000 and cut losses to $4,250. Because the ratio divides by losses, every dollar of churn you prevent raises it more than a dollar of new MRR does.

Monthly vs quarterly quick ratio

The ratio has no unit, so monthly and quarterly ratios compare directly. Monthly figures are noisy, though: one large cancellation or one big deal can swing the ratio from 2 to 6. Sum the movements over a quarter, or over a trailing three months, for a steadier reading, and watch the trend rather than any single month.

Common quick ratio mistakes

• Reading a high early ratio as proof of efficiency. With a small customer base, lost MRR is tiny, so the ratio is high almost automatically. As the base grows, the same churn rate costs more dollars every month and the ratio drifts down.
• Forgetting what growth cost. The quick ratio ignores sales and marketing spend. A ratio of 5 bought with a very expensive sales team is not efficient. Read it next to CAC payback or the magic number.
• Netting movements. Record expansion and contraction separately. Netting them hides both and changes the ratio.
• Mixing in non-recurring revenue. One-off fees and services are not MRR and do not belong on either side.
• Inconsistent classification. Decide once whether a returning customer counts as new or reactivated, and whether a plan switch is expansion or churn plus new, then keep it that way.

What's a good SaaS quick ratio?

In the SaaStr session, Hamid described the ratio as a simple pass-or-invest test, with 4 as the line. The SaaS CFO summarizes his bands: below 1 you are shrinking, between 1 and 4 you grow slowly and inefficiently, and above 4 you grow at a good rate and do it efficiently. ChartMogul treats under 2 as low and 2 to 4 as average.

Expansion carries more weight as companies scale. The Benchmarkit 2025 report found that expansion made up 40% of total new ARR in 2024, and over 50% at companies above $50M ARR, so the expansion term in the numerator matters as much as new business for larger companies.

How this calculator works

• MRR added is new + expansion + reactivation MRR. Empty fields count as zero, so leaving reactivation empty gives the classic ratio used in GrowPanel's report.
• MRR lost is churned + contraction MRR, entered as positive numbers.
• Quick ratio is MRR added divided by MRR lost. If nothing was lost, the ratio cannot be calculated and the calculator says so.
• Net new MRR is MRR added minus MRR lost.
• The verdict uses four bands: below 1, 1 to 2, 2 to 4, and 4 or higher.
• Limitations: one period is a snapshot, the ratio ignores what growth cost, and it naturally falls as your base grows. The math runs in your browser.

Related metrics and guides

• Expansion MRR and reactivation MRR, the less obvious parts of MRR added
• MRR churn, contraction MRR and net MRR churn, the loss side
• Magic number, growth compared with sales and marketing spend

Look at existing customers on their own with the NRR calculator, or check customer churn with the churn rate calculator.