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 Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Price to Earnings (P/E) since 2008
- Price to Operating Profit (P/OP) since 2008
- Price to Sales (P/S) since 2008
- Analysis of Revenues
- Aggregate Accruals
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).
1 2023 Calculation
Allowance as a percentage of receivables, gross = 100 × Allowance for doubtful accounts ÷ Receivables, gross
= 100 × ÷ =
- Allowance for doubtful accounts
- The allowance for doubtful accounts exhibited fluctuations over the analyzed periods. Starting at 1,371 thousand USD in 2018, it declined significantly in 2019 to 651 thousand USD, followed by an increase to 1,363 thousand USD in 2020. Subsequently, the allowance decreased to 768 thousand USD in 2021 but then rose gradually to 1,005 thousand USD in 2022 and 1,076 thousand USD in 2023.
- Receivables, gross
- Gross receivables showed a general upward trend from 101,090 thousand USD in 2018 to a peak of 234,687 thousand USD in 2022. Notably, the receivables grew steadily each year except for a decline in 2023, decreasing to 200,498 thousand USD, indicating a potential reduction in sales or changes in credit policies.
- Allowance as a percentage of gross receivables
- This ratio demonstrated a downward trend between 2018 and 2021, dropping from 1.36% to a low of 0.40%. Thereafter, it increased slightly to 0.43% in 2022 and further to 0.54% in 2023. This pattern suggests an initial improvement in credit risk management or collection efficiency up to 2021, followed by a moderate increase in estimated credit losses relative to gross receivables in the recent years.