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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- Balance Sheet: Assets
- Cash Flow Statement
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30).
1 2026 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
The analysis of credit loss provisions reveals a period of significant expansion in gross accounts receivable accompanied by a relatively conservative allowance strategy. While the absolute value of the allowance for credit losses has fluctuated, it has remained low in proportion to the total receivables balance throughout the observed period.
- Gross Accounts Receivable Trends
- A substantial increase in gross accounts receivable is observed from January 30, 2021, to January 28, 2023, where the balance grew from 538,739 thousand to 1,194,300 thousand. Following a slight decline and stabilization through February 1, 2025, a sharp escalation occurred by January 31, 2026, with receivables reaching 2,191,100 thousand. This trajectory indicates a significant increase in credit extended to customers or a shift in collection cycles during the final period.
- Allowance for Credit Losses Volatility
- The nominal allowance for credit losses exhibited fluctuation, rising from 2,071 thousand in 2021 to a peak of 2,960 thousand in 2022, before retreating and stabilizing around 2,000 thousand between 2023 and 2024. A notable increase is recorded in the final two periods, culminating in 4,500 thousand by January 31, 2026, which aligns with the overall expansion of the gross receivables balance.
- Credit Loss Ratio Analysis
- The allowance as a percentage of gross accounts receivable demonstrates a general downward trend for the first four years, declining from 0.38% in 2021 to 0.18% in 2024. Although a slight increase to 0.25% was observed in 2025, the ratio settled at 0.21% in 2026. The consistently low percentage—remaining well below 0.5%—suggests a high quality of the receivables portfolio and a low projected risk of default across the customer base.