Stock Analysis on Net

Biogen Inc. (NASDAQ:BIIB)

$22.49

This company has been moved to the archive! The financial data has not been updated since October 25, 2022.

Analysis of Bad Debts

Microsoft Excel

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

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in thousands)
Reserves for allowances
Accounts receivable, gross
Financial Ratio
Allowance as a percentage of accounts receivable, gross1

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

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


Reserves for Allowances
The reserves for allowances demonstrated a fluctuating trend over the five-year period. Starting at 46,000 thousand US dollars in 2017, the reserve significantly decreased to 34,700 thousand US dollars in 2018. Subsequently, there was an increase to 40,500 thousand US dollars in 2019, followed by a slight rise to 41,600 thousand US dollars in 2020. In 2021, the reserves again declined to 38,000 thousand US dollars.
Accounts Receivable, Gross
Gross accounts receivable showed variability over the observed years. The amount increased from 1,833,000 thousand US dollars in 2017 to a peak of 1,993,200 thousand US dollars in 2018. It then decreased to 1,921,000 thousand US dollars in 2019, had a minor rise to 1,955,400 thousand US dollars in 2020, and noticeably dropped to 1,587,400 thousand US dollars by the end of 2021.
Allowance as a Percentage of Accounts Receivable, Gross
The allowance as a percentage of gross accounts receivable declined from 2.51% in 2017 to a low of 1.74% in 2018, indicating a proportionally smaller allowance relative to accounts receivable despite the increased gross receivables. It then increased moderately to 2.11% in 2019 and slightly to 2.13% in 2020. In 2021, the ratio rose further to 2.39%, suggesting a cautious approach in estimating potential bad debts as the gross accounts receivable decreased.
Overall Insights
Throughout the period, there is evidence of the company adjusting its reserve for allowances in response to fluctuations in accounts receivable and perceived credit risk. The declining gross accounts receivable towards 2021 coupled with a rising allowance percentage suggests an increased focus on risk management and conservatism in estimating uncollectible accounts. The variability in reserves indicates dynamic financial management practices aligned with changing economic or operational conditions.