Quick Ratio

What is the Quick Ratio?

The quick ratio, in the context of startups, is a metric used to measure a company’s growth efficiency by comparing its revenue growth to revenue losses (churn). It provides insights into how effectively a company can grow its revenue while managing customer retention. A higher quick ratio indicates healthier growth and suggests that the company is adding more revenue than it is losing.

How to Calculate the Quick Ratio

• Formula: (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR).
• New MRR: Monthly Recurring Revenue gained from new customers.
• Churned MRR: Revenue lost from customers who have canceled their subscriptions.

Related Terms and Concepts

Monthly recurring revenue (MRR), churn, customer retention, growth metrics