{
  "slug": "saas-quick-ratio",
  "title": "SaaS Quick Ratio Calculator",
  "heading": "SaaS Quick Ratio Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/saas-quick-ratio",
  "summary": "See how much growth you generate for every dollar of churn and contraction.",
  "description": "The SaaS quick ratio compares revenue gained (new business plus expansion) against revenue lost (churn plus contraction) in the same period. A ratio of 4 means you generate $4 of new/expansion ARR for every $1 lost — a strong growth engine that can absorb some churn without stalling. A ratio near 1 means growth and losses are roughly canceling out, which is a plateau even if top-line ARR still ticks up slightly. Below 1, you're shrinking net of the noise even if bookings look fine on a dashboard. Rule of thumb: sustainable growth-stage SaaS wants a quick ratio of 4+ ; mature, larger companies often run 2-3 since law-of-large-numbers churn is harder to outrun proportionally. This metric is popular with VCs doing quick diligence because it needs only four inputs and instantly flags whether growth is coming from real net expansion or is being propped up by relentless new-logo acquisition covering a leaky base.",
  "formula": "Quick Ratio = (New ARR + Expansion ARR) ÷ (Churned ARR + Contraction ARR)",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=saas-quick-ratio",
  "inputs": [
    {
      "id": "newArr",
      "label": "New ARR from new customers",
      "kind": "number",
      "hint": null,
      "default": 300000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "expansionArr",
      "label": "Expansion ARR",
      "kind": "number",
      "hint": null,
      "default": 150000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "churnedArr",
      "label": "Churned ARR",
      "kind": "number",
      "hint": null,
      "default": 90000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "contractionArr",
      "label": "Contraction ARR",
      "kind": "number",
      "hint": null,
      "default": 40000,
      "unit": "$",
      "min": 0,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "quickRatio",
      "label": "SaaS Quick Ratio",
      "format": "decimal",
      "hint": null,
      "primary": true
    },
    {
      "id": "netNewArr",
      "label": "Net new ARR (period)",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "gained",
      "label": "Total ARR gained",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "expansionShare",
      "label": "Expansion share of gained ARR",
      "format": "percent",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "New ARR from new customers: 300000 $",
      "Expansion ARR: 150000 $",
      "Churned ARR: 90000 $",
      "Contraction ARR: 40000 $"
    ],
    "outputs": [
      "SaaS Quick Ratio: 3.46",
      "Net new ARR (period): $320,000",
      "Total ARR gained: $450,000",
      "Expansion share of gained ARR: 33.3%"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter new arr from new customers ($).",
      "Enter expansion arr ($).",
      "Enter churned arr ($).",
      "Enter contraction arr ($).",
      "Read your saas quick ratio on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "newArr": 180000,
        "expansionArr": 90000,
        "churnedArr": 55000,
        "contractionArr": 25000
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "newArr": 300000,
        "expansionArr": 150000,
        "churnedArr": 90000,
        "contractionArr": 40000
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "newArr": 480000,
        "expansionArr": 240000,
        "churnedArr": 145000,
        "contractionArr": 65000
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "What quick ratio should I aim for?",
      "a": "4.0 or higher is the classic benchmark for early- and growth-stage SaaS, popularized by investor Mamoon Hamid. Ratios of 2-4 are acceptable for larger, more mature companies where absolute churn dollars are bigger even at a low churn rate. Below 1 means you're shrinking net of gross gains."
    },
    {
      "q": "Why include contraction separately from churn in the denominator?",
      "a": "Contraction (downgrades, seat reductions) and full churn (lost logos) are different failure modes with different fixes — contraction often points to a packaging or usage problem while churn points to a value or competitive problem — but both belong in the denominator because both destroy the ARR you have to outrun."
    },
    {
      "q": "Can quick ratio be misleading?",
      "a": "Yes, at small ARR bases a single big deal or single lost account swings the ratio wildly, so don't over-read month-to-month noise on early-stage numbers. It's most useful once you have enough deal volume that individual accounts don't dominate the calculation."
    },
    {
      "q": "How does quick ratio relate to NRR?",
      "a": "They measure different things: NRR is retention-only (no new logos), quick ratio blends new-business growth with retention health into a single velocity number. A company can have great NRR but a mediocre quick ratio if new-logo growth has stalled."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/net-revenue-retention",
    "https://www.revenuelab.fyi/toolbox/sales-magic-number",
    "https://www.revenuelab.fyi/toolbox/arr-bridge"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — SaaS Quick Ratio Calculator (https://www.revenuelab.fyi/toolbox/saas-quick-ratio)"
}