Deferred Revenue in Cash Flow Statement
Need some help figuring out the accounting with deferred revenue.
Say a company sells a subscription a two year subscription worth 2400. After the first year, 1200 would be recognized, but the other 1200 would be deferred revenue.
Still, the company has all 2400 in cash. When calculating levered free cash flow for the year, you start with net income and add back depreciation, subtract capex, and subtract increases to NWC. Where do you account for the deferred revenue that you have in cash??
EDIT: I’m assuming that unearned revenue is a current liability, so it’s counted in NWC. Please let me know if that’s the right way to approach this
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