Stock Analysis on Net

Automatic Data Processing Inc. (NASDAQ:ADP)

$22.49

This company has been moved to the archive! The financial data has not been updated since April 29, 2022.

Analysis of Bad Debts

Microsoft Excel

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Allowance for Doubtful Accounts Receivable

Microsoft Excel
Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018 Jun 30, 2017 Jun 30, 2016
Selected Financial Data (US$ in thousands)
Allowance for doubtful accounts
Accounts receivable, gross
Financial Ratio
Allowance as a percentage of accounts receivable, gross1

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

1 2021 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × ÷ =


Allowance for doubtful accounts
The allowance for doubtful accounts showed an overall increasing trend from 38,100 thousand US dollars in 2016 to a peak of 92,500 thousand US dollars in 2020. However, in 2021, there was a decline to 79,600 thousand US dollars. This pattern indicates an increasing recognition of potential credit losses over time, with a notable spike in 2020 followed by some improvement or adjustment in 2021.
Accounts receivable, gross
The gross accounts receivable amount steadily increased over the period, rising from 1,780,900 thousand US dollars in 2016 to 2,807,000 thousand US dollars in 2021. This reflects consistent growth in the company's credit sales or outstanding receivables, possibly indicating increased sales or extended credit terms.
Allowance as a percentage of accounts receivable, gross
The allowance as a percentage of gross accounts receivable fluctuated over the years, starting at 2.14% in 2016, increasing to 2.83% in 2017, and then declining to 2.20% by 2019. In 2020, the percentage sharply increased to 3.65%, before moderately decreasing to 2.84% in 2021. These variations suggest adjustments in management's estimation of credit risk relative to the total receivables, with a significant reassessment occurring in 2020, possibly due to external economic factors impacting collectability.