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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- Income Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-10-26), 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25).
1 2025 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
The analysis of the financial data reveals specific trends in key balance sheet items related to accounts receivable and credit loss provisions over the observed periods.
- Accounts Receivable, Gross
- The gross accounts receivable amounts show a clear upward trend from October 2020 through October 2022, increasing from 2,993 million US dollars to 6,097 million US dollars. This indicates a significant rise in sales or outstanding customer balances during this timeframe. However, after peaking in 2022, the gross accounts receivable declined to 5,194 million US dollars by October 2023 and then showed minor fluctuations with values of 5,234 million US dollars in October 2024 and 5,185 million US dollars in October 2025, suggesting a stabilization or slight reduction in outstanding receivables.
- Allowance for Credit Losses
- The allowance for credit losses remained relatively stable from October 2020 to October 2023, consistently recorded at approximately 29 to 30 million US dollars. Data for allowances in the subsequent years are not reported, preventing further trend analysis. This stability, despite the significant changes in gross accounts receivable, indicates a conservative or steady approach toward reserving for potential credit losses.
- Allowance as a Percentage of Gross Accounts Receivable
- This ratio declined markedly from 1% in October 2020 to 0.48% in October 2022, reflecting a reduced proportion of allowance relative to receivables, which may suggest improved credit quality or more optimistic assumptions about collectability during that period. The ratio increased slightly to 0.56% by October 2023, indicating a modest adjustment likely in response to the decrease in gross receivables or changes in credit risk assessment. There is no data available beyond this period to evaluate the allowance ratio trend further.
Overall, the data points to a period of rapid growth in accounts receivable up to 2022, followed by a phase of stabilization. The allowance for credit losses remained relatively unchanged in absolute terms through 2023, while the relative allowance decreased in the earlier years and then rose slightly, reflecting adjustments in credit risk management. The lack of data for allowance beyond 2023 is a limitation for a complete long-term assessment.