Definition
Popularized by investor Mamoon Hamid, the SaaS quick ratio asks how many dollars you add for every dollar you lose. A leaky bucket can still grow if you pour fast enough; this ratio shows the leak.
Formula
Quick ratioQuick ratio = (New MRR + Expansion MRR) ÷ (Churned MRR + Contraction MRR)
Example
Demo Co, October: (9.8 + 4.2) ÷ (3.1 + 1.9) = 2.8.
Benchmarks
Above 4 is excellent for early-stage companies; between 1 and 2 means growth is working hard against churn.
Common mistakes
- Including reactivations as new business.
- Reading a single month in isolation; use a trailing quarter.
Examples use Demo Co, a fictional $3M ARR SaaS company, or a generic company where noted. Benchmarks are common reference points, not targets for every business.