Microsoft Excel LibreOffice Calc

Analysis of Bad Debts

Difficulty: Advanced

Allowance for doubtful accounts receivable (bad debts) is a contra account which reduce the balance of the company's 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 LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in thousands)
Allowances for doubtful accounts 38,700  40,300  44,300  55,000  100,300 
Accounts receivable, gross 4,585,000  4,069,700  3,557,300  3,289,600  3,534,700 
Ratio
Allowance as a percentage of accounts receivable, gross1 0.84% 0.99% 1.25% 1.67% 2.84%

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-19).

2017 Calculations

1 Allowance as a percentage of accounts receivable, gross = 100 × Allowances for doubtful accounts ÷ Accounts receivable, gross
= 100 × 38,700 ÷ 4,585,000 = 0.84%

Ratio Description The company
Allowance as a percentage of accounts receivable, gross Allowance for doubtful accounts divided by the gross accounts receivable. Eli Lilly & Co.'s allowance as a percentage of accounts receivable, gross declined from 2015 to 2016 and from 2016 to 2017.