I found something like this “Increasing customer advances (unearned revenue) will not require outflow of cash in the future so are less onerous than other liabilities.”
The conclusion is that growing unearned revenue increases accounting financial leverage, but true nature of leverage is not growing.
Do you agree?
From my point of view:
You got unearned revenue cash for products you still did not provide to the customer. So unearned revenue does not cause future cash outflow but causes future product outflow. From this point of view you are indeed truly leveraged more as you will have to put off inventory from your BS and it lowers your “true equity” and so on…