CVS Health Corp. (CVS)
Analysis of Bad Debts
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
Accounts receivable are stated net of allowances for doubtful accounts, customer credit allowances, contractual allowances and estimated terminations.
Source: 10-K (filing date: 2019-02-28).
Allowance for Doubtful Accounts Receivable
|Dec 31, 2018||Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 31, 2014|
|Selected Financial Data (US$ in millions)|
|Allowance for doubtful accounts receivable|
|Accounts receivable, gross|
|Allowance as a percentage of Accounts receivable, gross1|
1 2018 Calculation
Allowance as a percentage of Accounts receivable, gross = 100 × Allowance for doubtful accounts receivable ÷ Accounts receivable, gross
= 100 × ÷ =
|Financial ratio||Description||The company|
|Allowance as a percentage of Accounts receivable, gross||Allowance for doubtful accounts divided by the gross accounts receivable.||CVS Health Corp.’s allowance as a percentage of Accounts receivable, gross decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.|