Stock Analysis on Net

Devon Energy Corp. (NYSE:DVN)

$22.49

This company has been moved to the archive! The financial data has not been updated since November 8, 2023.

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.

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Allowance for Doubtful Accounts Receivable

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in millions)
Allowance for doubtful accounts
Gross accounts receivable
Financial Ratio
Allowance as a percentage of gross accounts receivable1

Based on: 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), 10-K (reporting date: 2018-12-31).

1 2022 Calculation
Allowance as a percentage of gross accounts receivable = 100 × Allowance for doubtful accounts ÷ Gross accounts receivable
= 100 × ÷ =


Allowance for doubtful accounts
The allowance for doubtful accounts fluctuated across the periods examined. It remained stable at $8 million in 2018 and 2019, increased to $11 million in 2020, then declined to $7 million in 2021, before rising again to $9 million in 2022.
Gross accounts receivable
Gross accounts receivable exhibited significant variability. Starting at $893 million in 2018, it decreased to $840 million in 2019 and further to $612 million in 2020. Subsequently, there was a substantial increase to $1,550 million in 2021 and a further rise to $1,776 million in 2022.
Allowance as a percentage of gross accounts receivable
This ratio showed noticeable changes during the period. It was relatively low but gradually increased from 0.9% in 2018 to a peak of 1.8% in 2020. Following this peak, the percentage dropped sharply to 0.45% in 2021 and slightly increased to 0.51% in 2022.
Summary
Overall, the data indicates a dynamic environment for accounts receivable management. The gross accounts receivable amounts decreased steadily until 2020, followed by a rapid and substantial increase over the next two years. Meanwhile, the allowance for doubtful accounts did not entirely mirror the fluctuations in receivables volume but peaked in 2020, likely reflecting heightened credit risk or more conservative provisioning in that year. The allowance as a percentage of gross receivables sharply increased in 2020, indicating higher perceived risk or expected uncollectibility during that period, before declining noticeably in 2021 and stabilizing somewhat in 2022. This suggests that despite growing receivables, the company adjusted its doubtful accounts provision downward relative to the larger receivable base in recent years.