Leverage / base / 3 to 6 months
a subscription or prepaid business is drawing down its deferred-revenue liability faster than new bookings and collections replenish it. Deferred revenue is cash a business has already collected for goods or services it has not yet delivered; recognizing that revenue draws the balance back down. When the balance falls across consecutive closes, recognized revenue is being funded by previously-collected cash rather than by new sales. This is a forward liquidity warning: the recognized revenue looks healthy today, but a materially declining deferred-revenue balance means part of that revenue is a drawdown of a finite reserve, and when the reserve runs out, recognized revenue steps down to whatever the current bookings pace supports.
Exact thresholds, formulas, and severity bands are omitted from this public view. The full methodology, with every figure, is available in the authenticated app.
This signal needs a run of deferred-revenue balances, a positive starting balance, and recognized revenue to compare against. A business that carries no deferred revenue, or too short a balance history, is reported as not applicable rather than scored.
The exact thresholds, the formula, and your own figures are in the authenticated app. See it against a real, simulated dataset for Integra Executive Services, our public demo company, or connect your own QuickBooks Online account.