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UBS ate CS, what's your opinion? Comment below:

Generally you can google these or look in the guides -- both of these are in there

IS: No change since no revenue was recognized
CFS: Increase in operating cash flow of 10
BS: Cash up 10, Deferred revenue (a liability) up 10

In this one you're receiving cash for future services so you want to reflect that


IS: Recognize cash expense of 10, after tax income of 6
CFS: Net income flows in, add back 10 since you're not paying anything out, cash net up 4
BS: Cash up 4, Debt up 10, Net income down 6

  • 3
  • Investment Analyst in IB - Gen

Thanks a lot man! Can you just elaborate on Q1: why would there be an increase of 10 on the cash flow section?

kellycriterion, what's your opinion? Comment below:

Deferred revenue is when the customer pays for something, but the service provider has not yet performed the service from a GAAP perspective (e.g. customer buys a magazine subscription for 12 months). Customer pays $120 for a 12 month subscription, and magazine company recognizes $120 in deferred revenue. This doesn't go on IS because no service has been performed by GAAP, so nothing has been earned. $120 in cash have been received, so you have to put that on the BS and CFS. Each month, you send the magazine to the customer, earn $10 worth of revenue because a service has been performed, and the deferred revenue balance goes down by $10 each month and revenue and equity go up by $10 each month.

  • Prospect in IB-M&A

doesn't PIK interest lump into the principal of the debt? by "adding back 10" do you mean under the debt line items/CFF?

  • Intern in IB - Gen

The 10 is added back on CFS as it is a non cash expense. It is added to debt on BS as PIK interest accrues on the existing balance.

god's sanest cokehead, what's your opinion? Comment below:

Intern in IB - Gen

The 10 is added back on CFS as it is a non cash expense. It is added to debt on BS as PIK interest accrues on the existing balance.

understood. what is the specific line item on the CFS being "added back"?

2rigged2fail, what's your opinion? Comment below:

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