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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- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-09-28), 10-K (reporting date: 2024-09-29), 10-K (reporting date: 2023-10-01), 10-K (reporting date: 2022-10-02), 10-K (reporting date: 2021-10-03), 10-K (reporting date: 2020-09-27).
1 2025 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
The financial data reveals certain trends in accounts receivable and related allowances over a six-year period.
- Accounts Receivable, Gross
- The gross accounts receivable exhibit a steady increase year over year from 910,500 thousand USD in 2020 to 1,301,500 thousand USD in 2025. This indicates a growing amount of credit sales or revenue recognized on account, implying business expansion or increased sales activities.
- Allowance for Credit Losses
- The allowance for credit losses generally trends downward from 27,100 thousand USD in 2020 to a low of 21,200 thousand USD in 2024, before rising again to 24,000 thousand USD in 2025. This suggests a cautious reduction in expected bad debts over time, with a slight increase in the latest year possibly reflecting adjustments due to economic factors or changes in credit risk assessments.
- Allowance as a Percentage of Accounts Receivable, Gross
- This ratio consistently decreases from 2.98% in 2020 to 1.72% in 2024, followed by a modest increase to 1.84% in 2025. The declining percentage indicates an improvement in the quality of receivables, with fewer anticipated losses relative to the amount owed by customers. The slight uptick in the final year might imply a small rise in credit risk or a more conservative approach to provisioning.
Overall, the data points to growth in accounts receivable accompanied by a generally improving credit loss outlook over the period, with some caution reflected in the most recent year.