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.

Allowance for Doubtful Accounts Receivable

Allowance for Doubtful Accounts Receivable

	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012
Selected Financial Data (US$ in millions)
Allowance for uncollectible accounts	14)	11)	7)	5)	7)
Accounts receivable, gross	1,742)	2,480)	2,534)	2,727)	2,754)
Financial Ratio
Allowance as a percentage of accounts receivable, gross¹	0.80%	0.44%	0.28%	0.18%	0.25%

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

¹ 2016 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for uncollectible accounts ÷ Accounts receivable, gross
= 100 × 14 ÷ 1,742 = 0.80%

Financial ratio	Description	The company
Allowance as a percentage of accounts receivable, gross	Allowance for doubtful accounts divided by the gross accounts receivable.	Anadarko Petroleum Corp. allowance as a percentage of accounts receivable, gross increased from 2014 to 2015 and from 2015 to 2016.

Anadarko Petroleum Corp. (NYSE:APC)

Analysis of Bad Debts

Allowance for Doubtful Accounts Receivable