Growth Quick Ratio
AdvancedThe growth quick ratio shows how many units of new growth a business creates for every unit of growth it loses.
The ratio divides gross gains by gross losses, so it describes the efficiency of growth rather than its size. A value near one means whatever is created is lost in the same period and the business is treading water, even when net growth still looks positive. That is exactly why it is used: two companies can post identical net growth, one through modest acquisition and strong retention, the other through heavy acquisition and heavy churn. Two limits apply: on a small base the number becomes very large and uninformative, and the same formula can be applied to revenue or to active users, which yields different results, so the basis must be stated.
How it is calculated
Growth quick ratio = (growth from new customers + expansion) ÷ (loss from churn + contraction)
Both sides must cover the same period on a single basis, either recurring revenue or active users, and mixing the two is not allowed. Returning customers must be assigned once and consistently to either the new or the expansion side. The output is a unitless ratio, and a value below one means the business is shrinking.