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.
Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).
1 2023 Calculation
Allowance as a percentage of trade receivables, gross = 100 × Allowances for doubtful accounts ÷ Trade receivables, gross
= 100 × 16 ÷ 2,240 = 0.71%
| Financial ratio | Description | The company |
|---|---|---|
| Allowance as a percentage of trade receivables, gross | Allowance for doubtful accounts divided by the gross accounts receivable. | Adobe Inc. allowance as a percentage of trade receivables, gross increased from 2021 to 2022 but then decreased significantly from 2022 to 2023. |