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: 2026-06-28), 10-K (reporting date: 2025-06-29), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-25), 10-K (reporting date: 2022-06-26), 10-K (reporting date: 2021-06-27).
1 2026 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance ÷ Accounts receivable, gross
= 100 × ÷ =
The analysis of bad debt provisions reveals a strategy of maintaining a very low allowance for doubtful accounts relative to the total volume of gross receivables. While the absolute value of the allowance indicates an upward trend in the final periods, the overall credit risk exposure remains minimal throughout the observed timeframe.
- Absolute Allowance Trends
- The allowance for doubtful accounts remained relatively stable between June 2021 and June 2024, fluctuating within a narrow range from US$ 5,255 thousand to US$ 5,606 thousand. A shift occurred in June 2025, where the allowance increased to US$ 6,496 thousand, further rising to US$ 8,071 thousand by June 2026. This represents a total increase of approximately 53.6% from the 2021 baseline.
- Gross Accounts Receivable Dynamics
- Gross receivables exhibited significant volatility, peaking in June 2022 at US$ 4,319,424 thousand before contracting to a period low of US$ 2,524,527 thousand in June 2024. Following this decline, a sharp expansion is observed, with the balance climbing to US$ 5,347,753 thousand by June 2026, indicating a substantial increase in the company's total credit extension to customers.
- Allowance Ratio Analysis
- The allowance as a percentage of gross accounts receivable remained consistently low, oscillating between 0.13% and 0.21%. The ratio reached its peak in June 2024 at 0.21%, which coincided with the lowest level of gross receivables. Despite the absolute increase in the allowance by June 2026, the ratio decreased to 0.15%, suggesting that the growth in gross receivables significantly outpaced the increase in the provision for doubtful accounts.