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.
Paying user area
Try for free
Danaher Corp. pages available for free this week:
- Cash Flow Statement
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Danaher Corp. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
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 trade accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Trade accounts receivable, gross
= 100 × ÷ =
The financial data reveals specific trends in the allowance for doubtful accounts and trade accounts receivable over the five-year period ending December 31, 2024.
- Allowance for Doubtful Accounts
- The allowance for doubtful accounts shows a gradual decline from 132 million USD in 2020 to 113 million USD in 2024. This downward trend suggests an overall improvement in the collectibility of receivables or a more conservative estimation of potential credit losses over time.
- Trade Accounts Receivable, Gross
- The gross value of trade accounts receivable experiences an increase from 4,177 million USD in 2020 to a peak of 5,044 million USD in 2022, followed by a decrease to 3,650 million USD by the end of 2024. This pattern indicates growth in sales or credit extension up to 2022, then a subsequent contraction or improvement in receivables turnover in the following years.
- Allowance as a Percentage of Trade Accounts Receivable, Gross
- The allowance as a percentage of gross trade accounts receivable decreases from 3.16% in 2020 to a low of 2.5% in 2022, then increases again to 3.1% by 2024. This suggests that relative to the size of receivables, the estimated credit risk initially declined but then rose again towards the end of the period, possibly reflecting changes in credit quality or collection policies.
In summary, while the total allowance amount declined, suggesting reduced absolute provision for doubtful debts, the fluctuating ratio of allowance to gross receivables indicates variability in credit risk assessment relative to receivables volume. The reduction in gross receivables after 2022 may have contributed to this shift, highlighting potential changes in operational or credit environments during the latter years.