Quick Ratio
When you need this method
Your gross new business looks strong, but net growth lags behind it. Growth numbers without netting out losses hide how much of every euro won immediately drains away. You need a metric that exposes growth efficiency after leaks.
Approach
- 1Track new MRR, expansion, churn and contraction separately each month.
- 2Calculate the quick ratio: (new MRR + expansion) divided by (churn + contraction).
- 3Read the value against the threshold: 4 or more is healthy, with top performers well above; 4 is the floor, not the goal.
- 4For low values, decompose whether the leak comes from cancellations or from downgrades.
- 5Prioritize retention work before investing more in acquisition.
Typical application
A typical case: a fast-growing SaaS celebrates new sales records every month, yet net MRR barely grows. The quick ratio sits well below the threshold: a large share of new business merely replaces what is simultaneously lost to cancellations and downgrades. Decomposition shows one customer segment in particular shrinking shortly after contract start. The team halts the sales budget increase and first invests in onboarding and product fit for that segment.
Limits and counter-indications
The quick ratio is a flow metric and says nothing about absolute size or profitability. Averaging across segments can hide opposing developments; beware of misleading aggregates. On very small MRR bases the value jumps around and is only reliable as a trend.
How to measure impact
Quick ratio tracked monthly or quarterly, complemented by decomposing the denominator into churn and contraction.
Related methods
Sources
- 1.The 2024 ICONIQ Growth Resiliency Rubric, ICONIQ Growth (opens in a new tab) · ICONIQ Growth · 2024 · investment, consulting or analyst firmFührt die Kennzahl als eine von fünf Prüfgrößen, nennt die Rechenvorschrift aus Neu- und Ausbau-Umsatz gegen Abwanderung und Verkleinerung und beziffert das oberste Viertel bei rund 3 auch jenseits von 100 Millionen wiederkehrendem Umsatz.
- 2.Diligence at Social Capital · Part 2: Accounting for Revenue Growth, Jonathan Hsu (opens in a new tab) · Social Capital (veröffentlicht auf Medium) · 2015 · practitioner sourceTrägt die Zerlegung des Umsatzwachstums in Neu-, Bestands-, Rückkehr- und Ausbau-Umsatz sowie die Prüfregeln, dass ein Wert über 4 bevorzugt wird und unter 2 auf zu hohe Abwanderung hindeutet.
- 3.What is the Quick Ratio Hiding?, Tomasz Tunguz (opens in a new tab) · tomtunguz.com · 2015 · practitioner sourceTrägt Formel und Zielwert und ergänzt die Warnung, dass hohe Wachstumsraten eine hohe Umsatzabwanderung im Nenner verdecken können.
Origin: Tunguz
Last reviewed: 2026-07-25 by Dr. Oliver Gausmann