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 Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Operating Profit Margin since 2007
- Return on Equity (ROE) since 2007
- Current Ratio since 2007
- Debt to Equity since 2007
- Price to Earnings (P/E) since 2007
- Analysis of Debt
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).
1 2025 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
The analysis of the provided financial data reveals several notable trends and shifts over the observed periods.
- Allowance for Credit Losses
- The allowance for credit losses has shown a consistent and significant downward trend, decreasing from 4,586 thousand USD in June 2020 to 73 thousand USD by June 2024. There is no data available for June 2025. This steady reduction indicates improved credit risk management or a lower expected default rate on receivables over time.
- Accounts Receivable, Gross
- The gross accounts receivable amount exhibits a marked upward trajectory from 408,331 thousand USD in June 2020 to a peak of 2,737,404 thousand USD in June 2024. However, in June 2025, a decrease is observed to 2,203,942 thousand USD. This growth trend until 2024 suggests increasing sales or extended credit terms, while the subsequent decline may reflect a tightening of credit policy or improved collections.
- Allowance as a Percentage of Accounts Receivable, Gross
- The allowance expressed as a percentage of gross accounts receivable has dramatically declined over the periods, starting at 1.12% in June 2020 and reaching essentially 0% by June 2024. This ratio's reduction aligns with both the decreasing allowance for credit losses and the substantial increase in receivables, indicating a lower provision relative to the size of outstanding receivables.
Overall, the financial data suggests that despite a growing volume of receivables over most periods, the company has consistently lowered its credit loss allowance both in absolute terms and as a percentage of receivables. This could imply enhanced credit quality of customers, improved collection processes, or changes in accounting estimates for credit loss provisioning. The slight decrease in receivables in the latest period may further impact future allowance levels.