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Analysis of Bad Debts
Allowance for doubtful accounts receivable (bad debts) is a contra account which reduce the balance of the company’s 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
|Dec 31, 2019||Dec 31, 2018||Dec 31, 2017||Dec 31, 2016||Dec 31, 2015|
|Selected Financial Data (US$ in thousands)|
|Reserves for allowances|
|Accounts receivable, gross|
|Allowance as a percentage of accounts receivable, gross1|
1 2019 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Reserves for allowances ÷ Accounts receivable, gross
= 100 × ÷ =
|Financial ratio||Description||The company|
|Allowance as a percentage of accounts receivable, gross||Allowance for doubtful accounts divided by the gross accounts receivable.||Biogen Inc.’s allowance as a percentage of accounts receivable, gross decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.|