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The Internet Compass

Metrics

SaaS Quick Ratio

The SaaS Quick Ratio is calculated as (new MRR + expansion MRR) divided by (churned MRR + contraction MRR) for a given period. A ratio above 4 is generally considered strong; below 1 means the company is shrinking.

The metric's value is isolating growth quality from growth size: two companies can report the same net new MRR while one is adding revenue faster than it loses it and the other is barely staying ahead of significant churn — the quick ratio distinguishes them where net MRR growth alone cannot.

It is directly analogous to the accounting quick ratio (liquid assets over current liabilities) in spirit: both ask whether the "good" side of a ledger comfortably covers the "bad" side, not just whether the net total is positive.

Example

A company adding $300K in new and expansion MRR while losing $75K to churn and contraction in the same month has a quick ratio of 4.0.