Stock Analysis on Net
Stock Analysis on Net
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Becton, Dickinson & Co. (NYSE:BDX)

Analysis of Bad Debts

Advanced level

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.

Accounting Policy on Receivables

Trade Receivables

BD grants credit to customers in the normal course of business and the resulting trade receivables are stated at their net realizable value. The allowance for doubtful accounts represents BD’s estimate of probable credit losses relating to trade receivables and is determined based on historical experience and other specific account data. Amounts are written off against the allowances for doubtful accounts when BD determines that a customer account is uncollectible.

Source: 10-K (filing date: 2019-11-27).

Allowance for Doubtful Accounts Receivable

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Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
Selected Financial Data (US$ in millions)
Allowance for doubtful accounts 75  75  54  61  53  30 
Trade receivables, gross 2,420  2,394  1,798  1,679  1,671  1,217 
Financial Ratio
Allowance as a percentage of trade receivables, gross1 3.10% 3.13% 3.00% 3.63% 3.17% 2.47%

Based on: 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25), 10-K (filing date: 2014-11-26).

1 2019 Calculation
Allowance as a percentage of trade receivables, gross = 100 × Allowance for doubtful accounts ÷ Trade receivables, gross
= 100 × 75 ÷ 2,420 = 3.10%

Financial ratio Description The company
Allowance as a percentage of trade receivables, gross Allowance for doubtful accounts divided by the gross accounts receivable. Becton, Dickinson & Co.’s allowance as a percentage of trade receivables, gross increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.