NVIDIA Corp. (NVDA)
Analysis of Bad Debts
High level of difficulty
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.
Receivables Accounting Policy
NVIDIA maintains an allowance for doubtful accounts receivable for estimated losses resulting from the inability of the customers to make required payments. NVIDIA determines this allowance by identifying amounts for specific customer issues as well as amounts based on overall estimated exposure. Factors impacting the allowance include the level of gross receivables, the financial condition of NVIDIA’s customers and the extent to which balances are covered by credit insurance or letters of credit.
Source: 10-K (filing date: 2019-02-21).
Allowance for Doubtful Accounts Receivable
|Jan 27, 2019||Jan 28, 2018||Jan 29, 2017||Jan 31, 2016||Jan 25, 2015||Jan 26, 2014|
|Selected Financial Data (US$ in millions)|
|Allowance for doubtful accounts|
|Accounts receivable, gross|
|Allowance as a percentage of accounts receivable, gross1|
Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-03-17), 10-K (filing date: 2015-03-12), 10-K (filing date: 2014-03-13).
1 Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × ÷ =
|Allowance as a percentage of accounts receivable, gross||Allowance for doubtful accounts divided by the gross accounts receivable.||NVIDIA Corp.’s allowance as a percentage of accounts receivable, gross declined from 2017 to 2018 and from 2018 to 2019.|