What this calculator measures
The SaaS quick ratio splits your MRR movement into what came in (new business plus expansion) and what leaked out (churn plus contraction), then divides one by the other. Two companies can post identical net growth with completely different ratios — and the one gaining $45k to lose $36k is a much sicker business than the one gaining $12k to lose $3k. The ratio is growth quality, where net new MRR is only growth quantity.
The formula
Not to be confused with the accounting quick ratio, which tests balance-sheet liquidity and shares nothing but the name — the collision is common enough that we keep a glossary entry on exactly this.
Worked example
In a month, a company adds $9,000 of new MRR and $3,000 of expansion while losing $2,400 to churn and $600 to downgrades. Gained = $12,000; lost = $3,000. Quick ratio = 4.0, net new MRR = +$9,000. Every pound lost was replaced four times over — efficient growth by the classic standard.
What good looks like
The canonical bands, from Mamoon Hamid’s early-stage SaaS analysis: below 1, the business is shrinking; 1–2, growing but churn consumes most of the effort; 2–4, respectable; above 4, efficient growth worth funding. Young SMB-focused products often live at 2–3 because SMB churn is structurally high — for them the trajectory of the ratio matters more than the level. Note the ratio ignores cost entirely: a quick ratio of 5 achieved with a sky-high CAC can still be a bad business.
Common mistakes
- Reading net new MRR as health. Net growth with a ratio near 1 is a treadmill speeding up — every future month must replace an ever-larger loss before growing at all.
- Leaving contraction out of the denominator. Downgrades are real losses; excluding them inflates the ratio, sometimes dramatically in seat-based products.
- Measuring on a tiny base. With 20 customers, one cancellation swings the ratio wildly. Measure quarterly until the base makes monthly figures stable.
- Comparing across business models. Enterprise SaaS with negligible monthly churn produces enormous quick ratios by construction; compare against your own history and segment peers, not a PLG product’s number.
FAQ
Is this the same as the accounting quick ratio?
No — they share a name and nothing else. The accounting quick ratio (acid-test) measures liquidity: liquid assets over current liabilities. The SaaS quick ratio measures growth quality: MRR gained over MRR lost. A company can score brilliantly on one and terribly on the other.
Why is 4 the benchmark for a good SaaS quick ratio?
The 4x bar comes from venture investor Mamoon Hamid’s analysis of early-stage SaaS: companies gaining at least four dollars of MRR for every dollar lost grew efficiently enough to compound. Below 4, an increasing share of sales effort goes to replacing losses rather than growing.
What if I lost no MRR this month?
The ratio divides by zero and is technically infinite — a lovely problem. It usually means the period is too short or the base too small for churn to register; measure over a quarter, or track the components until losses appear.