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Microsoft Excel LibreOffice Calc

Qualcomm Inc. (QCOM)


Analysis of Bad Debts

Difficulty: Advanced

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

Allowances for Doubtful Accounts

Qualcomm maintains allowances for doubtful accounts for estimated losses resulting from the inability of the customers to make required payments. Qualcomm considers the following factors when determining if collection of required payments is reasonably assured: customer credit-worthiness; past transaction history with the customer; current economic industry and/or geographic trends; changes in customer payment terms; and bank credit-worthiness for letters of credit. If Qualcomm has no previous experience with the customer, Qualcomm may request financial information, including financial statements or other documents, to determine that the customer has the means of making payment. Qualcomm may also obtain reports from various credit organizations to determine that the customer has a history of paying its creditors. If these factors do not indicate collection is reasonably assured, revenue is deferred as a reduction to accounts receivable until collection becomes reasonably assured, which is generally upon receipt of cash. If the financial condition of Qualcomm’s customers was to deteriorate, adversely affecting their ability to make payments, additional allowances would be required.

Source: 10-K (filing date: 2018-11-07).


Allowance for Doubtful Accounts Receivable

Microsoft Excel LibreOffice Calc
Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014 Sep 29, 2013
Selected Financial Data (USD $ in millions)
Allowances for doubtful accounts hidden hidden hidden hidden hidden hidden
Accounts receivable, trade, gross hidden hidden hidden hidden hidden hidden
Ratio
Allowance as a percentage of accounts receivable, trade, gross1 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05), 10-K (filing date: 2013-11-06).

2018 Calculations

1 Allowance as a percentage of accounts receivable, trade, gross = 100 × Allowances for doubtful accounts ÷ Accounts receivable, trade, gross
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Allowance as a percentage of accounts receivable, trade, gross Allowance for doubtful accounts divided by the gross accounts receivable. Qualcomm Inc.’s allowance as a percentage of accounts receivable, trade, gross increased from 2016 to 2017 and from 2017 to 2018.