The quick ratio is a simple way to determine whether "growth" is the right kind of growth!
We do this because in SaaS, not all growth is equal – it's possible to grow very efficiently (without any drag), or to grow inefficiently, with churn weighing down growth.
Because two types of growth might have the same result (e.g. a $10,000 jump in revenue), the quick ratio allows us to get behind the number to see how painful it was to achieve.
The higher the quick ratio, the better.
Yes, but they shouldn't be confused. In finance, the quick ratio is a type of liquidity ratio, which measures the ability of a company to use its near cash or quick assets to pay off its current liabilities immediately. In SaaS, it refers to a growth metric.
Be careful about definitions of the quick ratio as you may be reading about the accounting principle mentioned above. Try the following links for more: