How to Account for LT Deferred Revenues in (Unlevered Free Cash Flow)

[stvnx7]

Hi everyone,

I am new to the forums and registered in order to ask this question.

I am calculating (unlevered) free cash flows for a SaaS business - they have a lot of deferred revenues since they sell subscriptions.

Now, short-term referred revenue will be accounted for in the change in net working capital. But how do I account for long-term Deferred Revenue? It is a long-term liability, so it is not accounted for in the change in NWC calculation.

If I take the change in Long-Term Deferred Revenue (in order to be consistent with how short-term Deferred Revenue is being treated), I run into the problem that LT Deferred Revenue flows into short-term deferred revenue, so I'd be counting it again there.

Any suggestions?

(P.S., feel free to suggest I'm crazy as well).

 

[Counterofbeans]

Assuming that you have the correct S/T and L/T deferred liability amounts...

But how do I account for long-term Deferred Revenue? It is a long-term liability, so it is not accounted for in the change in NWC calculation.

It is a L/T liability and should NOT be considered in your NWC calculation.

If I take the change in Long-Term Deferred Revenue (in order to be consistent with how short-term Deferred Revenue is being treated), I run into the problem that LT Deferred Revenue flows into short-term deferred revenue, so I'd be counting it again there.

I don't understand. Whatever your S/T deferred revenue/liability is, that reduces your NWC. The fact that your L/T deferred is the only/primary account changing is fine.