Microsoft Excel LibreOffice Calc

Boeing Co. (BA)


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.


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)
Valuation allowance 57  62  65  94  127 
Accounts receivable, gross 3,936  10,578  8,897  8,807  7,856 
Ratio
Allowance as a percentage of accounts receivable, gross1 1.45% 0.59% 0.73% 1.07% 1.62%

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-12), 10-K (filing date: 2017-02-08), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Allowance as a percentage of accounts receivable, gross = 100 × Valuation allowance ÷ Accounts receivable, gross
= 100 × 57 ÷ 3,936 = 1.45%

Ratio Description The company
Allowance as a percentage of accounts receivable, gross Allowance for doubtful accounts divided by the gross accounts receivable. Boeing Co.’s allowance as a percentage of accounts receivable, gross declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

Allowance for Credit Losses

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 losses on receivables 12  10  16  21 
Gross customer financing 2,887  3,061  4,211  3,586  3,582 
Ratio
Allowance as a percentage of gross customer financing1 0.31% 0.39% 0.24% 0.45% 0.59%

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-12), 10-K (filing date: 2017-02-08), 10-K (filing date: 2016-02-10), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Allowance as a percentage of gross customer financing = 100 × Allowance for losses on receivables ÷ Gross customer financing
= 100 × 9 ÷ 2,887 = 0.31%

Ratio Description The company
Allowance as a percentage of gross customer financing Allowance for credit losses divided by the gross financing receivable. Boeing Co.’s allowance as a percentage of gross customer financing increased from 2016 to 2017 but then slightly declined from 2017 to 2018 not reaching 2016 level.