Calculate SaaS Quick Ratio with ease, understand financial health and revenue retention
The SaaS Quick Ratio is a metric used to evaluate a company's financial health by comparing its revenue growth to its revenue churn. It's a crucial indicator for investors and stakeholders to assess the sustainability and scalability of a SaaS business.
The formula for calculating the SaaS Quick Ratio involves dividing the sum of revenue additions (new and expansion revenue) by the sum of revenue subtractions (churn and contraction revenue). A higher ratio indicates better financial health.
For example, if a company has $10,000 in new revenue, $5,000 in expansion revenue, $2,000 in churn revenue, and $1,000 in contraction revenue, the SaaS Quick Ratio would be (10,000 + 5,000) / (2,000 + 1,000) = 5. This means for every dollar lost, the company gained five dollars.
New Revenue | Expansion Revenue | Churn Revenue | Contraction Revenue | SaaS Quick Ratio |
---|---|---|---|---|
$10,000 | $5,000 | $2,000 | $1,000 | 5 |
$8,000 | $3,000 | $1,500 | $500 | 7.33 |