Adobe Inc. (ADBE)
Analysis of Bad Debts
High level of difficulty
Allowance for doubtful accounts receivable (bad debts) is a contra account which reduce the balance of the company’s 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.
Receivables Accounting Policy
Allowance for Doubtful Accounts
Adobe maintains an allowance for doubtful accounts which reflects the best estimate of potentially uncollectible trade receivables. The allowance is based on both specific and general reserves. Adobe regularly reviews the trade receivables allowances by considering such factors as historical experience, credit-worthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’s ability to pay and Adobe specifically reserves for those deemed uncollectible.
Source: 10-K (filing date: 2019-01-25).
Allowance for Doubtful Accounts Receivable
|Nov 30, 2018||Dec 1, 2017||Dec 2, 2016||Nov 27, 2015||Nov 28, 2014||Nov 29, 2013|
|Selected Financial Data (US$ in thousands)|
|Allowances for doubtful accounts|
|Trade receivables, gross|
|Allowance as a percentage of trade receivables, gross1|
Based on: 10-K (filing date: 2019-01-25), 10-K (filing date: 2018-01-22), 10-K (filing date: 2017-01-20), 10-K (filing date: 2016-01-19), 10-K (filing date: 2015-01-20), 10-K (filing date: 2014-01-21).
1 Allowance as a percentage of trade receivables, gross = 100 × Allowances for doubtful accounts ÷ Trade receivables, gross
= 100 × ÷ =
|Allowance as a percentage of trade receivables, gross||Allowance for doubtful accounts divided by the gross accounts receivable.||Adobe Inc.’s allowance as a percentage of trade receivables, gross increased from 2016 to 2017 and from 2017 to 2018.|