Stock Analysis on Net

Estée Lauder Cos. Inc. (NYSE:EL)

$22.49

This company has been moved to the archive! The financial data has not been updated since August 18, 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
Jun 30, 2023 Jun 30, 2022 Jun 30, 2021 Jun 30, 2020 Jun 30, 2019 Jun 30, 2018
Selected Financial Data (US$ in millions)
Allowance for credit losses
Accounts receivable, gross
Financial Ratio
Allowance as a percentage of accounts receivable, gross1

Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).

1 2023 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit losses ÷ Accounts receivable, gross
= 100 × ÷ =


Allowance for Credit Losses

The allowance for credit losses exhibited notable fluctuations during the observed period. Starting at $29 million in mid-2018, it increased slightly to $32 million in mid-2019 before experiencing a significant spike to $63 million in mid-2020. This sharp rise could indicate heightened perceived risk or a downturn impacting receivables. Subsequently, the allowance dropped sharply to $20 million in mid-2021 and continued to decline to $10 million by mid-2022, indicating improved credit conditions or revised risk assessments. However, there was a slight increase to $16 million by mid-2023, suggesting a modest uptick in potential credit losses towards the end of the period.

Accounts Receivable, Gross

The gross accounts receivable showed considerable volatility over the years. The figure increased from $1,516 million in mid-2018 to a peak of $1,863 million in mid-2019, followed by a sharp decline to $1,257 million in mid-2020, possibly reflecting the effects of market conditions or changes in sales credit policies. Subsequently, the amount rose again to $1,722 million in mid-2021, then experienced a gradual decline over the next two years to $1,639 million in mid-2022 and further to $1,468 million by mid-2023. This pattern suggests fluctuations in credit sales or collections efficiency through the period.

Allowance as a Percentage of Gross Accounts Receivable

The allowance as a percentage of gross accounts receivable followed a fluctuating yet generally downward trend after the peak in mid-2020. Starting at 1.91% in mid-2018, it decreased slightly to 1.72% in mid-2019. It then surged to 5.01% in mid-2020, reflecting the heightened allowance for credit losses relative to receivables during that year. After this peak, the ratio declined sharply to 1.16% in mid-2021 and further dropped to a low of 0.61% in mid-2022. There was a moderate increase to 1.09% by mid-2023. This pattern indicates that the company adjusted its credit loss provisions relative to outstanding receivables in response to changing risk assessments, with significant caution in 2020 followed by reduced provisions in subsequent years.