Stock Analysis on Net

AT&T Inc. (NYSE:T)

$24.99

Analysis of Bad Debts

Microsoft Excel

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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Allowance for Doubtful Accounts Receivable

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Allowance for credit loss
Accounts receivable, gross
Financial Ratio
Allowance as a percentage of accounts receivable, gross1

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit loss ÷ Accounts receivable, gross
= 100 × ÷ =


Allowance for Credit Loss
There is a consistent decline in the allowance for credit loss over the five-year period. The amount decreased from 1,221 million USD in 2020 to 375 million USD in 2024, indicating a reduction of approximately 69%. This suggests an improvement in credit quality or more conservative provisioning practices.
Accounts Receivable, Gross
Gross accounts receivable show a significant downward trend from 21,436 million USD in 2020 to 10,013 million USD in 2024. This corresponds to a reduction of over 50% during the period, pointing to potentially improved collection processes, changes in sales volume, or shifts in credit policy.
Allowance as a Percentage of Accounts Receivable, Gross
The allowance as a percentage of gross accounts receivable fluctuates but overall trends downward, moving from 5.7% in 2020 to 3.75% in 2024. This decrease suggests that the company perceives lower credit risk relative to the volume of receivables, which aligns with the declining absolute allowance for credit losses and reducing accounts receivable balances.
Summary of Trends
The data collectively indicates a strengthening credit position and improved management of accounts receivable. The combined reductions in gross accounts receivable and allowance for credit loss, alongside a declining allowance percentage, reflect enhanced receivables quality, possibly due to improved collection efficiency or tighter credit standards.