Microsoft Excel LibreOffice Calc

Kraft Heinz Co. (KHC)


Analysis of Bad Debts

Difficulty: Advanced

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

Microsoft Excel LibreOffice Calc
Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (USD $ in millions)
Allowances related to trade accounts receivable 24  23  20  32 
Trade receivables, gross 2,153  944  789  903 
Ratio
Allowance as a percentage of trade receivables, gross1 1.11% 2.44% 2.53% 3.54%

Based on: 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

2018 Calculations

1 Allowance as a percentage of trade receivables, gross = 100 × Allowances related to trade accounts receivable ÷ Trade receivables, gross
= 100 × 24 ÷ 2,153 = 1.11%

Ratio Description The company
Allowance as a percentage of trade receivables, gross Allowance for doubtful accounts divided by the gross accounts receivable. Kraft Heinz Co.’s allowance as a percentage of trade receivables, gross declined from 2016 to 2017 and from 2017 to 2018.