Stock Analysis on Net

Bristol-Myers Squibb Co. (NYSE:BMY)

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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, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Allowance for expected credit loss
Trade receivables, gross
Financial Ratio
Allowance as a percentage of trade receivables, gross1

Based on: 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), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Allowance as a percentage of trade receivables, gross = 100 × Allowance for expected credit loss ÷ Trade receivables, gross
= 100 × ÷ =


Over the period from 2020 to 2024, there is a noticeable upward trend in both the gross trade receivables and the allowance for expected credit losses. The gross trade receivables increased gradually from $7,237 million in 2020 to $9,057 million in 2024, reflecting growth in outstanding customer balances.

Simultaneously, the allowance for expected credit losses rose from $18 million in 2020 to $45 million in 2024. This increase suggests a more conservative approach to credit risk or a reflection of anticipated higher credit losses on receivables. The rise in the allowance outpaced the growth in trade receivables, particularly evident in 2024 where the allowance amount nearly doubled compared to 2023.

The allowance as a percentage of gross trade receivables remained relatively stable and low from 2020 to 2023, fluctuating slightly around 0.25% to 0.27%. However, in 2024, there was a marked increase to 0.5%, indicating a significant adjustment or reassessment of credit risk exposure relative to the receivables portfolio.

Trends in gross trade receivables
Gradual increase of approximately 25% over five years, suggesting growth in sales on credit or a lengthening of payment terms.
Allowances for expected credit loss
Steady increase, with a sharper rise in the final year evaluated, pointing to heightened caution toward credit risk or expected increases in doubtful accounts.
Allowance as a percentage of trade receivables
Stable low ratio for four years with a significant jump in the last year, signaling either a change in credit policy, economic environment, or customer credit quality.