I'm brokering a deal with a lot of deferred revenue. This makes the income statement appear terrible, but the cash flow statement is positive. Curious how the searcher community views deferred revenue in a business valuation?
More specific example: it is a fitness studio that sells punch passes, many of which are never redeemed. As a result, these never hit the income statement - straight to the balance sheet. Making revenue appear much lower than actual cash flow.

Do you take an average redemption % as your normalization of cash flow? Or do you simply look at the EV of the company to look at all balance sheet items?