This pertains to off balance sheet obligations

When valuing a company with operating lease obligations, the present value of footnoted amounts due are included with debt. Many retailers count lease expense as a cost of revenue and some count it in operating expense.

Netflix has nearly $3.7 billion in off balance sheet obligations due in 1 to 5 years for their leasing of streaming content liabilities. SC is COGS. These are not on the balance sheet. They are non-contingent binding contracts. Are these equivalent to off balance sheet debt obligations when valuing the company?

Question

This pertains to off balance sheet obligations

When valuing a company with operating lease obligations, the present value of footnoted amounts due are included with debt. Many retailers count lease expense as a cost of revenue and some count it in operating expense. 

Netflix has nearly $3.7 billion in off balance sheet obligations due in 1 to 5 years for their leasing of streaming content liabilities. SC is  COGS. These are not on the balance sheet. They are non-contingent binding contracts. Are these equivalent to off balance sheet debt obligations when valuing the company?

anonymous · Answer

Yes you can consider them as off balance sheet debt obligations. But make sure you take the Present value of lease commitments and not sum up the lease commitments