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.
Paying user area
Try for free
Boeing Co. pages available for free this week:
- Income Statement
- Common-Size Balance Sheet: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Boeing Co. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowances for expected credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
The allowances for expected credit losses demonstrate a significant decline over the observed period. Initially reported at US$390 million in 2021, the allowance decreased substantially to US$76 million by 2025. This reduction is mirrored by a corresponding decrease in the allowance as a percentage of gross accounts receivable.
- Allowance for Expected Credit Losses
- The allowance experienced its most dramatic reduction between 2021 and 2022, falling from US$390 million to US$116 million. Subsequent decreases were more moderate, moving from US$116 million in 2022 to US$89 million in 2023, US$92 million in 2024, and finally US$76 million in 2025. The allowance remained relatively stable between 2023 and 2024 before concluding with a slight decrease in the final year.
- Gross Accounts Receivable
- Gross accounts receivable exhibited a fluctuating pattern. A decrease was noted from US$3,031 million in 2021 to US$2,633 million in 2022. The following year saw a slight increase to US$2,738 million, followed by a minimal decrease to US$2,723 million in 2024. Accounts receivable concluded the period with an increase to US$2,997 million in 2025.
- Allowance as a Percentage of Gross Accounts Receivable
- This ratio reflects the declining trend in the allowance. Starting at 12.87% in 2021, the percentage decreased to 4.41% in 2022. The rate of decline slowed in subsequent years, reaching 3.25% in 2023, 3.38% in 2024, and ultimately 2.54% in 2025. The slight increase from 3.25% to 3.38% between 2023 and 2024 represents a minor deviation from the overall downward trend.
The consistent decrease in the allowance for expected credit losses, coupled with the declining percentage of that allowance relative to gross accounts receivable, suggests a perceived reduction in credit risk over the period. This could be attributable to improved collection processes, a shift in customer creditworthiness, or changes in the overall economic environment. The increase in gross accounts receivable in 2025, while the allowance continues to decrease, further supports the conclusion of improved credit management.
Allowance for Credit Losses
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Allowance as a percentage of financing receivables, gross = 100 × Allowance for losses on receivables ÷ Financing receivables, gross
= 100 × ÷ =
The allowance for losses on receivables exhibited significant fluctuation between 2021 and 2023, followed by a substantial decrease in 2024. Simultaneously, financing receivables, gross, demonstrated a consistent downward trend throughout the observed period. The relationship between these two items, expressed as a percentage, reveals evolving credit risk management practices or changing customer creditworthiness.
- Allowance for Losses on Receivables
- The allowance began at US$18 million in 2021 and increased considerably to US$55 million in 2022. This increase suggests a heightened perception of credit risk or changes in accounting policies. A further increase to US$51 million occurred in 2023, indicating continued concern regarding potential uncollectible amounts. However, a dramatic reduction to US$7 million was observed in 2024, implying improved collections, write-offs, or a revised assessment of credit risk.
- Financing Receivables, Gross
- Financing receivables, gross, decreased from US$1,356 million in 2021 to US$288 million in 2024. This consistent decline could be attributed to reduced sales activity, changes in financing terms offered to customers, or a strategic decision to decrease exposure to financing arrangements. The rate of decline accelerated between 2022 and 2023, and again between 2023 and 2024.
- Allowance as a Percentage of Financing Receivables, Gross
- This ratio began at 1.33% in 2021, indicating a relatively low level of anticipated credit losses relative to outstanding receivables. The ratio increased significantly to 4.63% in 2022 and peaked at 7.75% in 2023, reflecting a growing proportion of potentially uncollectible receivables as the gross receivables balance decreased. The substantial drop to 2.43% in 2024 suggests that the reduction in the allowance amount outpaced the decline in gross receivables, potentially indicating improved credit quality or more aggressive write-off policies. The trend suggests a proactive approach to managing credit risk, with adjustments made to the allowance based on changing economic conditions or portfolio composition.
The combined trends suggest a period of increasing credit risk followed by a significant adjustment, potentially due to improved economic conditions, successful collection efforts, or a change in risk assessment methodologies. Further investigation into the underlying drivers of these changes would be beneficial.