See how efficiently your subscription revenue grows. Enter new, expansion, churned and contraction MRR to get the SaaS quick ratio and its benchmark rating, plus net new MRR, retention rates and a period-by-period trend.
Last updated:
MRR gained this period
$
From newly won customers
$
Upgrades, extra seats, add-ons
$
Former customers who came back
MRR lost this period
$
Customers who cancelled
$
Downgrades and fewer seats
Optional
$
Adds growth, churn and retention rates
Enter your values to see the result.
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How to use the SaaS Quick Ratio Calculator
Enter MRR gained this period: new and expansion (plus reactivation if you track it).
Enter MRR lost: churned and contraction, as positive amounts.
Optionally add starting MRR to see growth, churn and retention rates.
Paste earlier periods in the history box to see the trend.
Press Calculate quick ratio to see the ratio, its rating and the targets table.
SaaS quick ratio formula
Quick ratio = (new MRR + expansion MRR) ÷ (churned MRR + contraction MRR)
Example: in March a company adds $30,000 of new MRR and $8,000 of expansion, while losing $7,000 to cancellations and $3,000 to downgrades. Its quick ratio is $38,000 ÷ $10,000 = 3.8, and net new MRR is $28,000 ($336,000 of net new ARR). To reach 4 with the same losses it would need $40,000 of gained MRR, or it could cut losses to $9,500.
Benchmark bands
Quick ratio
Rating
What it means
Below 1
Shrinking
More MRR leaves than arrives
1 – 2
Weak
Churn cancels out half or more of new revenue
2 – 4
Healthy
Growing, with room to improve retention or expansion
4 or more
Excellent
Efficient growth; the commonly quoted target
How to raise your quick ratio
Cut churn first: every dollar retained improves the denominator and the long-term revenue base.
Watch contraction separately from churn; frequent downgrades often point to pricing or packaging issues.
Compare the trend over several periods rather than reacting to a single month.
Frequently asked questions
What is the SaaS quick ratio?
The SaaS quick ratio measures growth efficiency: how much recurring revenue a company adds for each dollar it loses. It equals (new MRR + expansion MRR) ÷ (churned MRR + contraction MRR). The idea was popularized by investor Mamoon Hamid. It is unrelated to the accounting quick (acid-test) ratio, which measures liquidity.
What is a good SaaS quick ratio?
A quick ratio of 4 or more is the commonly cited benchmark for efficient growth: $4 of new and expansion MRR for every $1 churned or contracted. Between 1 and 4 the company is growing but losing a meaningful share of what it adds, and below 1 MRR is shrinking.
How do you calculate the SaaS quick ratio?
Add new and expansion MRR for the period, then divide by churned plus contraction MRR for the same period. Example: ($30,000 + $8,000) ÷ ($7,000 + $3,000) = 3.8, just under the target of 4.
Should reactivation MRR be included?
Some teams add reactivated (returning) customers to the numerator because that revenue was previously counted as churn. Include it if you also count those customers in churned MRR when they leave, and be consistent from period to period.
Why can a high quick ratio still hide problems?
Early-stage companies with little existing revenue often show very high quick ratios simply because there is little to churn. As the customer base grows, churn in dollars grows too, so watch the ratio alongside gross churn and net revenue retention.
Monthly or quarterly: which period should I use?
Either works as long as all four inputs cover the same period. Monthly figures react quickly but can be noisy; quarterly or trailing-three-month numbers give a steadier view for board reporting.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.