Stock Analysis on Net

Albemarle Corp. (NYSE:ALB)

$22.49

This company has been moved to the archive! The financial data has not been updated since May 3, 2023.

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, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in thousands)
Allowance for doubtful accounts
Trade accounts receivable, gross
Financial Ratio
Allowance as a percentage of trade accounts receivable, gross1

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 2022 Calculation
Allowance as a percentage of trade accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Trade accounts receivable, gross
= 100 × ÷ =


Allowance for doubtful accounts
The allowance for doubtful accounts exhibits a general declining trend from 2018 through 2020, decreasing from 4,460 thousand USD to 2,083 thousand USD. A slight increase is observed in 2021, reaching 2,559 thousand USD, followed by a marginal decrease to 2,534 thousand USD in 2022.
Trade accounts receivable, gross
Gross trade accounts receivable demonstrate moderate fluctuations initially, moving from 610,172 thousand USD in 2018 to 616,362 thousand USD in 2019, then declining to 532,921 thousand USD in 2020. The value rises again to 559,481 thousand USD in 2021, followed by a significant increase to 1,193,504 thousand USD in 2022.
Allowance as a percentage of trade accounts receivable, gross
This ratio shows a consistent downward trend over the period analyzed. Starting at 0.73% in 2018, it gradually decreases each year, reaching a low of 0.21% in 2022. This indicates that the allowance for doubtful accounts is becoming a smaller proportion of the gross trade receivables over time.
Overall analysis
The decreasing allowance for doubtful accounts alongside the increasing gross trade accounts receivable, especially the sharp rise in 2022, suggests improved credit risk management or more optimism regarding collectability of receivables. The declining allowance as a percentage of gross receivables reinforces this view, implying that the company perceives lower credit risk or has adjusted its estimate policies for doubtful accounts. However, the substantial jump in gross receivables in 2022 warrants attention to confirm that the quality of receivables remains stable despite increasing volumes.