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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- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Return on Assets (ROA) since 2005
- Price to Sales (P/S) since 2005
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Allowance for Doubtful Accounts Receivable
Based on: 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), 10-K (reporting date: 2019-11-02).
1 2024 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowances ÷ Accounts receivable, gross
= 100 × ÷ =
- Allowance for Doubtful Accounts Trends
- The allowance for doubtful accounts exhibited a general decreasing trend from November 2, 2019, to October 30, 2021, declining sharply from 8,387 to 2,658 thousand USD. In the subsequent year, this figure increased to 4,571 thousand USD before falling again to 2,763 thousand USD as of October 28, 2023. A significant increase was observed by November 2, 2024, with the allowance rising to 7,160 thousand USD. This fluctuation suggests periodic reassessments or adjustments in expected credit losses.
- Accounts Receivable, Gross
- Gross accounts receivable showed strong growth from 643,523 thousand USD in November 2019 to a peak of 1,805,033 thousand USD in October 29, 2022. Following this peak, a marked decline occurred over the next two years, dropping to 1,472,497 thousand USD by October 28, 2023, and further to 1,343,491 thousand USD as of November 2, 2024. This pattern suggests initial expansion in sales or credit extended, followed by a contraction or tighter credit management.
- Allowance as a Percentage of Gross Accounts Receivable
- The allowance relative to gross accounts receivable consistently decreased from 1.3% in November 2019 to a low of 0.18% in October 30, 2021. Afterward, the ratio slightly increased to 0.25% in October 29, 2022 but remained below 0.3% until October 28, 2023, before rising to 0.53% by November 2, 2024. These changes indicate improved credit quality or reduced risk exposure during the peak expansion period, followed by a moderate increase in perceived credit risk reflected in the later periods.