medium · Investment Banking
In a DCF analysis, why is the change in Deferred Revenue specifically included in the Free Cash Flow calculation?
- To account for the non-cash interest expense associated with the liability.
- To bridge the gap between 'Accounting Revenue' and 'Actual Cash Receipts' from customers.
- Because Deferred Revenue is a non-cash charge that must be added back like Depreciation.
- To ensure the terminal value accounts for the eventual liquidation of all liabilities.
Sign up free to see the explanation and track your rank →
More Investment Banking practice
- What is the Multiple on Invested Capital (MOIC)?
- What is the control premium?
- Which valuation methodology would likely produce the 'floor' valuation for a mature indust
- Which of the following changes, held in isolation, would most likely achieve this?
- What is the Multiple on Invested Capital (MOIC)?
- If a company has an Unlevered Free Cash Flow (UFCF) of $500 million in Year 5, a WACC of 1
- What is the 3-year Compound Annual Growth Rate (CAGR)?
- If a company's Net Debt is negative, what is the relationship between its Equity Value and