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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- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2015
- Return on Assets (ROA) since 2015
- Price to Earnings (P/E) since 2015
- Price to Operating Profit (P/OP) since 2015
- Price to Sales (P/S) since 2015
- Analysis of Debt
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Allowance as a percentage of trade receivables, gross = 100 × Allowance for credit losses ÷ Trade receivables, gross
= 100 × ÷ =
- Allowance for credit losses
- The allowance for credit losses exhibited an upward trend from 2018 to 2020, increasing from 427 thousand US dollars in 2018 to 2,886 thousand US dollars in 2020. A slight decline occurred in 2021 to 2,626 thousand US dollars, followed by a rise again in 2022, reaching 3,202 thousand US dollars.
- Trade receivables, gross
- Gross trade receivables displayed significant fluctuations over the observed period. Starting at 174,006 thousand US dollars in 2018, there was a substantial increase in 2019 to 300,856 thousand US dollars. This was followed by a decline in 2020 to 221,592 thousand US dollars, then a notable surge to 458,965 thousand US dollars in 2021 and a further considerable increase to 908,348 thousand US dollars in 2022.
- Allowance as a percentage of trade receivables, gross
- The allowance as a percentage of gross trade receivables initially rose sharply from 0.25% in 2018 to 0.82% in 2019 and further to 1.3% in 2020. This was followed by a decline to 0.57% in 2021 and a further decrease to 0.35% in 2022. This pattern suggests a relative improvement in credit risk or collection efficiency in relation to the size of receivables during the latter years.