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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- Common-Size Income Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Return on Assets (ROA) since 2012
- Current Ratio since 2012
- Price to Earnings (P/E) since 2012
- Price to Operating Profit (P/OP) since 2012
- Analysis of Debt
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-07-31), 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31).
1 2025 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
The financial data reveals notable trends in accounts receivable and the associated allowance for credit losses over the examined periods.
- Accounts receivable, gross
- There is a consistent upward trend in gross accounts receivable, increasing from 1,039,400 thousand US dollars in July 2020 to 2,974,700 thousand US dollars projected for July 2025. This represents a substantial growth in outstanding receivables over the five-year span, indicating an expansion in sales or credit extended to customers.
- Allowance for credit losses
- The allowance for credit losses shows fluctuation but generally an increasing trend, rising from 2,300 thousand US dollars in July 2020 to a forecasted 9,700 thousand US dollars by July 2025. The allowance peaked at 11,200 thousand US dollars in July 2021, then declined somewhat in subsequent years before rising again towards the latest forecast.
- Allowance as a percentage of accounts receivable, gross
- This ratio exhibits variability, starting at 0.22% in July 2020, increasing significantly to 0.89% in July 2021, then declining steadily to 0.29% in July 2024, with a slight uptick to 0.33% projected in July 2025. The increase in 2021 suggests heightened credit risk assessment or deterioration, with subsequent improvements or adjustments reducing the relative allowance before a modest increase in the most recent forecast.
Overall, the growth in gross accounts receivable reflects expanding business activity or more extensive credit policies. The allowance for credit losses, while increasing in absolute terms, does not increase proportionally with receivables, as shown by the declining percentage after 2021. This suggests either improved credit quality, better collection practices, or adjustments in credit loss estimation methodologies over time. The slight increase in allowance ratio in the last forecast year may indicate a cautious stance regarding credit risk going forward.