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
Delta Air Lines Inc. pages available for free this week:
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2007
- Total Asset Turnover since 2007
- Analysis of Revenues
- Analysis of Debt
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Delta Air Lines Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for uncollectible accounts ÷ Accounts receivable, gross
= 100 × ÷ =
- Allowance for Uncollectible Accounts
- The allowance for uncollectible accounts remained relatively stable from 2017 through 2019, fluctuating marginally between $12 million and $13 million. However, a significant increase occurred in 2020, when the allowance surged dramatically to $89 million, more than six times the previous year's figure. In 2021, the allowance decreased substantially to $50 million but remained considerably elevated compared to the pre-2020 period.
- Accounts Receivable, Gross
- The gross accounts receivable figures exhibited moderate variability over the analyzed period. Beginning at $2,389 million in 2017, the balance slightly decreased to $2,326 million in 2018, followed by an increase to $2,867 million in 2019. In 2020, there was a notable reduction to $1,485 million, nearly halving the previous year's value, before rebounding to $2,454 million in 2021. This pattern suggests fluctuations in credit sales or collections, with an evident contraction in 2020 and partial recovery in the subsequent year.
- Allowance as Percentage of Gross Accounts Receivable
- This ratio, reflecting the estimated uncollectible portion of receivables, remained under 1% from 2017 to 2019, indicating a historically low level of credit risk. The ratio escalated sharply in 2020 to 5.99%, signaling a significant deterioration in receivable quality or heightened credit risk during that year. Although the percentage declined to 2.04% in 2021, it remained substantially above pre-2020 levels, highlighting ongoing elevated risk or conservatism in allowance estimates.