Stock Analysis on Net

Cummins Inc. (NYSE:CMI)

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.


Allowance for Doubtful Accounts Receivable

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Allowance for doubtful account 75 78 33 39 19
Accounts and notes receivable, gross 5,658 5,280 4,023 3,859 3,689
Financial Ratio
Allowance as a percentage of accounts and notes receivable, gross1 1.33% 1.48% 0.82% 1.01% 0.52%

Based on: 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), 10-K (reporting date: 2019-12-31).

1 2023 Calculation
Allowance as a percentage of accounts and notes receivable, gross = 100 × Allowance for doubtful account ÷ Accounts and notes receivable, gross
= 100 × 75 ÷ 5,658 = 1.33%

Financial ratio Description The company
Allowance as a percentage of accounts and notes receivable, gross Allowance for doubtful accounts divided by the gross accounts receivable. Cummins Inc. allowance as a percentage of accounts and notes receivable, gross increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.