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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- Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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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 receivable, gross = 100 × Allowances ÷ Accounts receivable, gross
= 100 × ÷ =
- Allowance for Doubtful Accounts
- The allowance for doubtful accounts has shown a consistent decline from 25,900 thousand US dollars in 2020 to 14,800 thousand US dollars in 2023, with a slight increase to 14,900 thousand US dollars in 2024. This overall downward trend suggests improved credit quality or more effective collection processes over the years.
- Accounts Receivable, Gross
- The gross accounts receivable have steadily increased each year, starting at 5,901,200 thousand US dollars in 2020 and rising significantly to 11,020,600 thousand US dollars by 2024. This doubling over the five-year span indicates expanding sales or revenue on credit terms.
- Allowance as a Percentage of Accounts Receivable, Gross
- This ratio declines markedly from 0.44% in 2020 down to 0.14% in 2024. The decreasing allowance relative to gross accounts receivable implies a lower estimated risk of uncollectible receivables, reflecting positively on the quality of the receivables portfolio or changes in estimation policies.