Gross additions have to outrun the leaks.
The SaaS Quick Ratio compares new and expanded recurring revenue with revenue lost through contraction and churn. It describes the composition of growth, rather than the size or profitability of the company.
This is different from the balance-sheet quick ratio used to assess liquidity. A high SaaS ratio on a small or very young customer base can fall as cohorts mature, so avoid universal good-or-bad thresholds.
The formula, made clear.
- Additions
- New and expansion recurring revenue in the same period.
- Losses
- Contraction and churn entered as positive magnitudes.
Put the numbers in context.
$20,000.00 new MRR and $10,000.00 expansion against $8,000.00 total losses produce a 3.75× ratio.
| Input | Example value |
|---|---|
| New customer MRR | $20,000.00 |
| Expansion MRR | $10,000.00 |
| Contraction MRR | $3,000.00 |
| Churned MRR | $5,000.00 |
| SaaS Quick Ratio | 3.75× |
What this calculation assumes
Consistent period and MRR movement definitions. Zero losses produce an undefined ratio, even with positive additions; this should not be reported as a measured infinite efficiency.
Methodology references
What to consider next.
Check gross revenue retention and customer concentration before drawing conclusions from the ratio.
How we approach financial models →