Allowance for doubtful accounts receivable (bad debts) is a contra account which reduce the balance of the company gross accounts receivable. The relationship between the allowance and the balance in receivables should be relatively constant unless there is a change in the economy overall or a change in customer base.

Allowance for Doubtful Accounts Receivable
Allowance for Credit Losses

	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Selected Financial Data (US$ in millions)
Allowance for doubtful accounts	90)	72)	62)	68)	62)
Accounts and notes receivable, gross	4,067)	4,485)	3,923)	3,502)	2,999)
Financial Ratio
Allowance as a percentage of accounts and notes receivable, gross¹	2.21%	1.61%	1.58%	1.96%	2.06%

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

¹ 2015 Calculation
Allowance as a percentage of accounts and notes receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts and notes receivable, gross
= 100 × 90 ÷ 4,067 = 2.21%

Financial ratio	Description	The company
Allowance as a percentage of accounts and notes receivable, gross	Allowance for doubtful accounts divided by the gross accounts receivable.	EMC Corp. allowance as a percentage of accounts and notes receivable, gross increased from 2013 to 2014 and from 2014 to 2015.

	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011
Selected Financial Data (US$ in millions)
Allowance for credit losses	7)	6)	9)	17)	24)
Gross lease receivables	154)	233)	252)	329)	336)
Financial Ratio
Allowance as a percentage of gross lease receivables¹	4.55%	2.58%	3.57%	5.10%	7.23%

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

¹ 2015 Calculation
Allowance as a percentage of gross lease receivables = 100 × Allowance for credit losses ÷ Gross lease receivables
= 100 × 7 ÷ 154 = 4.55%

Financial ratio	Description	The company
Allowance as a percentage of gross lease receivables	Allowance for credit losses divided by the gross financing receivable.	EMC Corp. allowance as a percentage of gross lease receivables decreased from 2013 to 2014 but then increased from 2014 to 2015 exceeding 2013 level.

EMC Corp. (NYSE:EMC)

Analysis of Bad Debts

Allowance for Doubtful Accounts Receivable

Allowance for Credit Losses