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.
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- Statement of Comprehensive Income
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- Analysis of Geographic Areas
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- Analysis of Revenues
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Allowance for Doubtful Accounts Receivable
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 accounts and notes receivable, gross = 100 × Allowance ÷ Accounts and notes receivable, gross
= 100 × ÷ =
- Allowance
- The allowance for doubtful accounts fluctuated over the analyzed period. It increased from 284 million USD in 2020 to a peak of 457 million USD in 2022, indicating a heightened provision for potential credit losses during that year. Subsequently, the allowance decreased to 301 million USD in 2023 and further to 259 million USD in 2024, suggesting an improved outlook on receivables or enhanced credit management.
- Accounts and Notes Receivable, Gross
- The gross accounts and notes receivable demonstrated a general upward trend. Starting at 11,755 million USD in 2020, it rose sharply to 18,722 million USD in 2021 and further increased to 20,913 million USD in 2022. There was a slight decline to 20,222 million USD in 2023, followed by an increase again to 20,943 million USD in 2024. This indicates overall growth in credit extended to customers, albeit with minor fluctuations.
- Allowance as a Percentage of Accounts and Notes Receivable, Gross
- The allowance as a percentage of gross receivables showed a downward trend over the period. It started at 2.42% in 2020, decreased to 1.62% in 2021, rose slightly to 2.19% in 2022, then declined to 1.49% in 2023, and further to 1.24% in 2024. This reduction in percentage terms, despite the fluctuations in allowance value, indicates an overall improvement in receivables quality or more conservative provisioning relative to the size of receivables.