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

Allowance for Doubtful Accounts Receivable

	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020	Jul 31, 2019	Jul 31, 2018
Selected Financial Data (US$ in thousands)
Allowance for credit losses	7,800)	8,900)	11,200)	2,300)	800)	1,200)
Accounts receivable, gross	2,471,000)	2,151,400)	1,251,600)	1,039,400)	583,200)	468,500)
Financial Ratio
Allowance as a percentage of accounts receivable, gross¹	0.32%	0.41%	0.89%	0.22%	0.14%	0.26%

Based on: 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), 10-K (reporting date: 2019-07-31), 10-K (reporting date: 2018-07-31).

¹ 2023 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit losses ÷ Accounts receivable, gross
= 100 × 7,800 ÷ 2,471,000 = 0.32%

Financial ratio	Description	The company
Allowance as a percentage of accounts receivable, gross	Allowance for doubtful accounts divided by the gross accounts receivable.	Palo Alto Networks Inc. allowance as a percentage of accounts receivable, gross decreased from 2021 to 2022 and from 2022 to 2023.

Palo Alto Networks Inc. (NASDAQ:PANW)

Analysis of Bad Debts

Allowance for Doubtful Accounts Receivable