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SaaS Quick Ratio Calculator

Enter new, expansion, churned, and contraction MRR to find the SaaS quick ratio.

How it is calculated

All four inputs are monthly recurring revenue (MRR) amounts for the same period, such as one month or one quarter. gained = new MRR + expansion MRR and lost = churned MRR + contraction MRR. The quick ratio is gained ÷ lost, rounded to two decimals. A value above 1 means MRR is growing, and the higher it is, the more new revenue you add for each unit lost. New MRR comes from first-time customers, expansion from existing customers paying more (upgrades, seats), churned MRR from customers who cancelled, and contraction from customers who downgraded. Values cannot be negative. If the total lost is zero the ratio is undefined, so the tool gives no result. Amounts are in US dollars.

Worked example

In one month a company adds 18,000 of new MRR and 6,500 of expansion MRR, and loses 4,200 to cancellations and 1,300 to downgrades. Gained: 18,000 + 6,500 = $24,500.00. Lost: 4,200 + 1,300 = $5,500.00. Quick ratio: 24,500 ÷ 5,500 = 4.45. The company adds about 4.45 dollars of recurring revenue for every dollar it loses, so net new MRR for the month is 24,500 − 5,500 = 19,000.

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Common mistakes

  • Mixing periods, for example new MRR for a quarter with churn for a single month. All four figures must cover the same time span or the ratio is meaningless.
  • Leaving contraction out because it is small or hard to find. Downgrades are part of the lost side, and ignoring them overstates the ratio.
  • Entering one-off revenue such as set-up fees or services. The inputs should be recurring revenue only.
  • Entering annual contract value instead of monthly amounts. Divide yearly contracts by 12 so that every field is MRR.
  • Treating a high ratio as proof of health. Early-stage companies with almost no churn get very large ratios, and a ratio says nothing about profitability or cash burn.

About this calculator

The SaaS quick ratio, a metric popularized by venture investor David Skok, measures growth efficiency by comparing revenue gained to revenue lost in a period: (new MRR + expansion MRR) ÷ (churned MRR + contraction MRR). A ratio of 4 means you’re adding four dollars of new and expansion revenue for every dollar lost to churn and downgrades — a commonly cited threshold for healthy, capital-efficient growth.

Unlike net revenue retention, which only looks at the existing customer base, the quick ratio includes new-customer revenue in the numerator, making it a broader gauge of whether growth is outrunning leakage. SaaS founders, operators and the VCs who fund them track this ratio alongside NRR and churn to sanity-check whether topline growth is being quietly eaten by churn under the surface. Add new and expansion MRR, divide by churned plus contraction MRR, and you have the SaaS quick ratio; enter the four figures and it is done for you.

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Comments (1)

  • Editorial team

    Read the two halves of the fraction separately. With 18,000 new and 6,500 expansion MRR against 4,200 churn and 1,300 contraction, the ratio is 4.45; if churn were 9,200 instead, it would drop to 2.33 with the same gains. So a weaker ratio can come from leakage, not slow selling. Compare quarters using the same period length. Which of the four inputs is hardest for you to pull from your billing data?

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