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.
Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).
1 2021 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × 4 ÷ 2,433 = 0.16%
| Financial ratio | Description | The company |
|---|---|---|
| Allowance as a percentage of accounts receivable, gross | Allowance for doubtful accounts divided by the gross accounts receivable. | NVIDIA Corp. allowance as a percentage of accounts receivable, gross decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level. |