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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- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2007
- Total Asset Turnover since 2007
- Analysis of Debt
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Allowance for Doubtful Accounts Receivable
Based on: 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), 10-K (reporting date: 2019-06-30).
1 2024 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
- Allowance for Credit Losses
- The allowance for credit losses has demonstrated a consistent declining trend over the analyzed periods, decreasing from 8,906 thousand US dollars in mid-2019 to 73 thousand US dollars in mid-2024. This reduction indicates an improving credit environment or enhanced recoverability of receivables over time.
- Accounts Receivable, Gross
- The gross accounts receivable have shown a substantial upward trend, increasing from 402,530 thousand US dollars in mid-2019 to a significantly higher amount of 2,737,404 thousand US dollars by mid-2024. This growth suggests an expansion in sales or credit extended to customers, with a particularly notable acceleration between mid-2021 and mid-2024.
- Allowance as a Percentage of Accounts Receivable, Gross
- This ratio has steadily declined from 2.21% in mid-2019 to virtually 0% in mid-2024. The decreasing allowance relative to the rising accounts receivable balance reflects an increasingly lower anticipated credit loss risk, or possibly more conservative management in estimating credit losses despite growing receivables.