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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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Allowance as a percentage of receivables, gross = 100 × Allowance for doubtful accounts ÷ Receivables, gross
= 100 × ÷ =
The allowance for doubtful accounts exhibited fluctuating behavior over the five-year period. Initially decreasing, it subsequently increased before declining again. This movement occurred in conjunction with significant changes in gross receivables, impacting the allowance as a percentage of receivables.
- Allowance for Doubtful Accounts (USD in thousands)
- The allowance for doubtful accounts decreased from $3,692 thousand in 2021 to $2,290 thousand in 2022, representing a 37.9% reduction. A subsequent increase was observed in 2023, rising to $4,553 thousand. This upward trend continued into 2024, reaching $5,808 thousand, before decreasing to $3,888 thousand in 2025.
- Gross Receivables (USD in thousands)
- Gross receivables demonstrated a consistent upward trend throughout the period. From $346,386 thousand in 2021, receivables increased to $491,735 thousand in 2022, and $504,532 thousand in 2023. Further growth was seen in 2024, reaching $710,447 thousand, culminating in $1,001,278 thousand in 2025. This represents a substantial overall increase in outstanding receivables.
- Allowance as a Percentage of Gross Receivables
- The allowance as a percentage of gross receivables decreased significantly from 1.07% in 2021 to 0.47% in 2022. It partially recovered to 0.90% in 2023 and 0.82% in 2024, before declining to 0.39% in 2025. This indicates that, despite increases in the absolute allowance amount in 2023 and 2024, the growth in gross receivables outpaced the increase in the allowance, resulting in a lower percentage. The 2025 value represents the lowest percentage over the observed period.
The fluctuations in the allowance for doubtful accounts, coupled with the consistent growth in gross receivables, suggest a dynamic credit environment. The decreasing percentage indicates a potentially increasing risk exposure relative to receivables, particularly in the most recent year. Further investigation into the aging of receivables and credit policies may be warranted.