SaaS Quick Ratio

The term, Quick Ratio, is a finance concept that provides a simplistic metric for a company’s liquidity and is defined as Liquid Assets divided by Current Liabilities. Any number greater than 1.0 is good. In SaaS parlance, the Quick Ratio is a metric in that it’s simple and uses 1.0 as a benchmark. It differs in that the QR is a growth metric calculated as the dollar growth in recurring revenue divided by the loss of recurring revenue. The specific calculation is as follows,

SaaS Quick Ratio 1

…where Recurring Revenue can be either Annual or Monthly.

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