Calculate SaaS Quick Ratio from new MRR, expansion MRR, contraction MRR, and churned MRR to assess revenue growth efficiency.
The SaaS Quick Ratio scores a single period's growth efficiency. Enter four dollar amounts - new customer MRR, expansion MRR from upgrades and add-ons, contraction MRR from downgrades, and churned MRR from cancellations - and the tool divides the two growth components by the two loss components: (New + Expansion) / (Contraction + Churn). The result is a ratio, not a percentage, and it is not the accounting quick ratio. The thing users most often miss: the ratio measures efficiency, not scale, and 1.0 does not mean no growth - it means growth exactly offset losses, so net MRR was flat.
A concrete input and expected output from the current implementation.
Input
New MRR 20000, Expansion MRR 5000, Contraction MRR 3000, Churned MRR 2000
Expected output
Quick Ratio 5.0 - Growth $25,000 (new + expansion), Losses $5,000 (contraction + churn), Net MRR change +$20,000
(20,000 + 5,000) / (3,000 + 2,000) = 25,000 / 5,000 = 5.0. For every $1 of MRR lost, the company added $5, leaving net MRR $20,000 higher than the month started.
Each input is a dollar amount for the same reporting period, normally pulled from an MRR reconciliation or net-MRR-movement report. The tool sums new and expansion MRR into a growth total and contraction and churned MRR into a loss total, then divides growth by losses. The quotient is unitless: dollars of growth earned for every dollar of revenue lost, and net MRR change for the period equals growth minus losses.
A quotient of 1.0 means growth exactly offset losses, so net MRR was flat. Above 1.0, growth beats losses and MRR rises; below 1.0, MRR shrinks. The often-quoted healthy benchmark is 4.0 or higher, a rule of thumb for top-quartile SaaS companies rather than an official standard. If the period had no contraction and no churn, the denominator is zero and the ratio is undefined; such a period is better reported by its dollar growth directly.
A frequently repeated rule of thumb: 4.0 or above indicates healthy, top-quartile SaaS growth efficiency, around 2.0 is workable but fragile, and below 1.0 means losses exceed growth so MRR is shrinking. This is a convention, not an official standard, and for young companies with small revenue volumes a single month's ratio is noisy; look at the trend.
Subscription billing and finance systems usually offer an MRR reconciliation, sometimes labeled net MRR movement, that breaks the period's change into new, expansion, contraction, and churn. If your system reports only the net change, you cannot derive the components from it - you need the source-level breakdown or a billing export grouped by change type.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
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