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Estée Lauder Cos. Inc. (EL)
Analysis of Bad Debts
High level of difficulty
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.
Receivables Accounting Policy
Accounts receivable, net is stated net of the allowance for doubtful accounts and customer deductions. The allowance for doubtful accounts is based upon the evaluation of accounts receivable aging, specific exposures and historical trends.
Source: 10-K (filing date: 2019-08-23).
Allowance for Doubtful Accounts Receivable
Based on: 10-K (filing date: 2019-08-23), 10-K (filing date: 2018-08-24), 10-K (filing date: 2017-08-25), 10-K (filing date: 2016-08-24), 10-K (filing date: 2015-08-20), 10-K (filing date: 2014-08-20).
2019 Calculations
1 Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts and customer deductions ÷ Accounts receivable, gross
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Allowance as a percentage of accounts receivable, gross | Allowance for doubtful accounts divided by the gross accounts receivable. | Estée Lauder Cos. Inc.’s allowance as a percentage of accounts receivable, gross declined from 2017 to 2018 and from 2018 to 2019. |