What is SaaS Quick Ratio?
Nexa Consultancy | Startup & Finance Glossary
The SaaS Quick Ratio is a measure of a company's growth efficiency. It compares the revenue gained from new and expanding customers to the revenue lost from churned and downgrading customers.
For Startups: It provides a quick snapshot of a SaaS company's health. A high ratio indicates sustainable, efficient growth, which is highly attractive to investors.
For SaaS: A common benchmark is a Quick Ratio of 4 or higher, which means the company is adding at least ₹4 in new revenue for every ₹1 it loses.
Calculation: Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR)
Example: A company adds ₹1 Lakh in new MRR and ₹20,000 in expansion, while losing ₹30,000 to churn. Its Quick Ratio is (100k + 20k) / 30k = 4.