Replies to post #77342 on Biotech Values

[DewDiligence]

Re: Deferred Revenue line on balance sheet

exwannabe makes a good point: When doing a net-worth calculation, deferred revenue should not be counted as a true liability because it’s a non-cash accounting artifact.

Note: The portion of deferred revenue that a company expects to recognize as revenue in less than one year shows up on the balance sheet as a current liability rather than a long-term liability. Thus, to deduct deferred revenue from “real” liabilities for valuation purposes, one must count both the current portion and the LT portion. The current portion of deferred revenue is not always broken out in the condensed balance sheets companies typically report in press releases, so one needs to go to the SEC filings to get the uncondensed balance sheet.