Stock Analysis on Net

Generac Holdings Inc. (NYSE:GNRC)

$22.49

This company has been moved to the archive! The financial data has not been updated since August 8, 2022.

Analysis of Bad Debts

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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.


Allowance for Doubtful Accounts Receivable

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Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in thousands)
Allowance for credit losses
Accounts receivable, gross
Financial Ratio
Allowance as a percentage of accounts receivable, gross1

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for credit losses ÷ Accounts receivable, gross
= 100 × ÷ =


The financial data reveals a consistent increase in the allowance for credit losses over the five-year period, rising from 4,805 thousand USD in 2017 to 12,025 thousand USD in 2021. This growth indicates a rising provision to cover potentially uncollectible accounts which could suggest increased credit risk or more conservative credit loss recognition policies.

Accounts receivable, gross, shows a significant upward trend, growing from 284,807 thousand USD in 2017 to 558,491 thousand USD in 2021. This near doubling in the value of accounts receivable points to expanding sales or extended credit terms to customers, which increases the capital tied up in receivables.

The allowance as a percentage of gross accounts receivable exhibits some fluctuation. Initially, it declines slightly from 1.69% in 2017 to 1.47% in 2018, then increases sharply to 3.10% in 2020, before falling back to 2.15% in 2021. This pattern suggests a variable approach to provisioning relative to the size of gross receivables, possibly reflecting changes in the expected collectability of receivables or adjustments in credit policy in response to economic conditions.

Overall, the data indicates that while accounts receivable growth places upward pressure on credit risk provisions, the allowance percentage has not consistently kept pace, indicating management's possible reassessments of credit risk and collection prospects over time. The peak in 2020 may be associated with elevated risk concerns during that year, followed by some relaxation or improved collection expectations in 2021.