Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Caterpillar Inc. (NYSE:CAT)

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.


Allowance for Credit Losses

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Allowance for credit losses 420  507  362  341  336 
Finance receivables, gross 22,397  22,426  22,632  22,397  22,959 
Financial Ratio
Allowance as a percentage of finance receivables, gross1 1.88% 2.26% 1.60% 1.52% 1.46%

Based on: 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16).

1 2019 Calculation
Allowance as a percentage of finance receivables, gross = 100 × Allowance for credit losses ÷ Finance receivables, gross
= 100 × 420 ÷ 22,397 = 1.88%

Financial ratio Description The company
Allowance as a percentage of finance receivables, gross Allowance for credit losses divided by the gross financing receivable. Caterpillar Inc.’s allowance as a percentage of finance receivables, gross increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level.