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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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-11-01), 10-K (reporting date: 2024-11-02), 10-K (reporting date: 2023-10-28), 10-K (reporting date: 2022-10-29), 10-K (reporting date: 2021-10-30), 10-K (reporting date: 2020-10-31).
1 2025 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowances ÷ Accounts receivable, gross
= 100 × ÷ =
The financial data reveals several notable trends in the accounts receivable and allowances over the observed periods. Accounts receivable, gross, exhibits a strong upward movement from 741,886 thousand USD in 2020 to a peak of 1,805,033 thousand USD in 2022, followed by a decline to approximately 1,441,516 thousand USD in 2025. This pattern suggests an initial phase of growth in receivables, potentially linked to revenue expansion or credit policies, followed by a reduction which might indicate improved collection efficiency or a contraction in sales.
Allowances, which represent estimated uncollectible amounts, show fluctuations across the years without a clear upward or downward trajectory. The value decreased from 4,350 thousand USD in 2020 to 2,658 thousand USD in 2021, rose again to 7,160 thousand USD by 2024, and slightly dropped to 5,441 thousand USD in 2025. This variability may reflect changing expectations regarding credit losses or adjustments in provision methodologies.
When analyzing the allowance as a percentage of gross accounts receivable, the ratio remains fairly low throughout the periods, ranging from 0.18% to 0.59%. It is highest at 0.59% in 2020, declining to its lowest level of 0.18% in 2021. Thereafter, the percentage varies moderately, ending at 0.38% in 2025. The relatively stable and low ratio indicates cautious estimation of doubtful accounts relative to the size of the receivables pool, suggesting a generally strong credit quality.
- Accounts Receivable Trend
- Steady growth until 2022 followed by a decline towards 2025.
- Allowances Trend
- Fluctuations indicating periodic reassessment or changing credit loss expectations.
- Allowance Percentage
- Remains low and somewhat stable, reflecting controlled credit risk exposure.