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,
…where Recurring Revenue can be either Annual or Monthly.