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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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Geographic Areas
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) 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 notes and accounts receivable, gross = 100 × Reserves ÷ Notes and accounts receivable, gross
= 100 × ÷ =
- Reserves
- The reserves exhibit fluctuations over the five-year period. Starting at 474 million US dollars in 2020, there was a gradual increase reaching a peak of 570 million in 2022. However, a significant decline occurred in 2023 to 271 million, followed by a recovery back to 476 million in 2024. This pattern suggests volatility possibly due to changes in market conditions or company-specific factors affecting resource availability or valuation.
- Notes and accounts receivable, gross
- This item shows a consistent upward trend from 21,055 million US dollars in 2020 to a peak of 42,319 million in 2022. After peaking, there is a decline over the next two years, reaching 35,758 million by 2024. The overall increase until 2022 indicates growth in credit sales or receivables, while the post-2022 decrease might indicate improved collections, reduced sales on credit, or tighter credit management.
- Allowance as a percentage of notes and accounts receivable, gross
- The allowance percentage shows a steady decline from 2.25% in 2020 to a low of 0.71% in 2023, indicating an improving assessment of collectibility or lowering risk of receivable defaults. However, this trend reverses slightly in 2024 when the allowance increases to 1.33%, which may reflect a reassessment of credit risk or increasing concerns about receivables' collectibility.