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Microsoft Excel LibreOffice Calc

AbbVie Inc. (ABBV)


Analysis of Bad Debts

Difficulty: Advanced

Allowance for doubtful accounts receivable (bad debts) is a contra account which reduce the balance of the company’s 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.


Receivables Accounting Policy

Accounts Receivable

Accounts receivable are stated at their net realizable value. The allowance for doubtful accounts reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. Accounts receivable are written off after all reasonable means to collect the full amount (including litigation, where appropriate) have been exhausted. The allowance for doubtful accounts was $51 millionat December 31, 2018 and $58 million at December 31, 2017.

Source: 10-K (filing date: 2019-02-27).


Allowance for Doubtful Accounts Receivable

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Allowance for doubtful accounts hidden hidden hidden hidden hidden
Accounts and other receivables, gross hidden hidden hidden hidden hidden
Ratio
Allowance as a percentage of accounts and other receivables, gross1 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-17), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-20).

2018 Calculations

1 Allowance as a percentage of accounts and other receivables, gross = 100 × Allowance for doubtful accounts ÷ Accounts and other receivables, gross
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Allowance as a percentage of accounts and other receivables, gross Allowance for doubtful accounts divided by the gross accounts receivable. AbbVie Inc.’s allowance as a percentage of accounts and other receivables, gross declined from 2016 to 2017 and from 2017 to 2018.