Analysis of Bad Debts
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.
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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Price to Earnings (P/E) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31).
1 2022 Calculation
Allowance as a percentage of trade receivables = 100 × Allowance for credit losses ÷ Trade receivables
= 100 × ÷ =
- Allowance for Credit Losses
- The allowance for credit losses exhibited a general upward trend from 2017 to 2020, increasing from 282 thousand US dollars to a peak of 1,202 thousand US dollars in 2020. Subsequently, it decreased over the next two years, reaching 624 thousand US dollars by 2022.
- Trade Receivables
- Trade receivables showed an overall increase from 54,337 thousand US dollars in 2017 to 91,232 thousand US dollars in 2022. Notably, the figure rose significantly from 2017 to 2019, peaking at 91,849 thousand in 2019, before experiencing a slight decline and fluctuations in the following years.
- Allowance as a Percentage of Trade Receivables
- This percentage was relatively stable around 0.5% from 2017 to 2018, then surged to 1.13% in 2019 and peaked at 1.4% in 2020. After this peak, there was a marked decrease to 0.79% in 2021 and further to 0.68% in 2022. This indicates that the relative allowance set aside for credit losses rose significantly in 2019 and 2020 before moderating in subsequent years.