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Question - What can we learn from the Wall street? 📈

Answer - How to gauge health of a business. 🩺

Question - How?

Answer - Measure "Quick ratio"

You must be wondering,

What's quick ratio, Abhishek?

Let's take a Swiggy example.

1. Typical Swiggy user orders food once a week.

2. Anyone who stopped ordering once a week - zombies.

3. Anyone who ordered for the first time - babies.

4. Anyone who were a zombie but started ordering again - returned zombies

The quick ratio for Swiggy.

Quick ratio = (babies + returned zombies) / zombies

Quick ratio = positive user growth/ churn

Case 1

50 babies added in July.

100 users became zombies same month.

80 zombies returned the same month.

Quick ratio = (50+80)/100 = 1.3

Quick ratio > 1,

Swiggy is growing.

Case 2

50 babies added in July.

100 users became zombies same month.

50 zombies returned the same month.

Quick ratio = (50+50)/100 = 1

Quick ratio = 1,

Swiggy is not growing.

Case 3

50 babies added in July.

100 users became zombies same month.

30 zombies returned the same month.

Quick ratio = (50+30)/100 = 0.8

Quick ratio < 1,

Swiggy is not de-growing.

It's as simple as that.

Next time you answer if your product is growing, use quick ratio.