Stock Analysis on Net

HP Inc. (NYSE:HPQ)

$22.49

This company has been moved to the archive! The financial data has not been updated since August 29, 2019.

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.


Allowance for Doubtful Accounts Receivable

Microsoft Excel
Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Selected Financial Data (US$ in millions)
Allowance for doubtful accounts
Accounts receivable, gross
Financial Ratio
Allowance as a percentage of accounts receivable, gross1

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

1 2018 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × ÷ =


Allowance for Doubtful Accounts
The allowance for doubtful accounts shows a consistent decline from 332 million USD in 2013 to 101 million USD in 2017, indicating a reduction in the estimated uncollectible receivables over this period. However, in 2018, the allowance increased to 129 million USD, suggesting a cautious reassessment of credit risk or a rise in potential doubtful accounts.
Accounts Receivable, Gross
The gross accounts receivable exhibit a declining trend from 16,208 million USD in 2013 to 13,552 million USD in 2015. A significant drop occurs in 2016 down to 4,221 million USD, then a slight increase is observed in subsequent years, reaching 5,242 million USD in 2018. This sharp decrease in 2016 may reflect changes in business operations, sales volume, or collection policies.
Allowance as a Percentage of Accounts Receivable, Gross
This ratio decreases steadily from 2.05% in 2013 to a low of 1.39% in 2015, indicating an improvement in the quality of receivables or reduced perceived credit risk during that period. However, there is a rise to 2.53% in 2016, followed by a slight decrease to 2.24% in 2017 and an increase again to 2.46% in 2018. The fluctuations after 2015 suggest varying credit risk assessments correlating with the changes in the gross receivables.
Overall Analysis
The data reveals a decreasing trend in both gross accounts receivable and allowance for doubtful accounts through 2015, indicating potentially improved collection efforts and reduced credit risk. The abrupt decline in gross accounts receivable in 2016 aligns with an increase in the allowance ratio, which may signal a strategic shift or economic factors affecting collectability. The subsequent moderate increase in receivables and allowance in 2018 suggests a cautious approach to credit risk management amid changing business conditions.

Allowance for Credit Losses

Microsoft Excel
Oct 31, 2018 Oct 31, 2017 Oct 31, 2016 Oct 31, 2015 Oct 31, 2014 Oct 31, 2013
Selected Financial Data (US$ in millions)
Allowance for doubtful accounts
Financing receivables, gross
Financial Ratio
Allowance as a percentage of financing receivables, gross1

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

1 2018 Calculation
Allowance as a percentage of financing receivables, gross = 100 × Allowance for doubtful accounts ÷ Financing receivables, gross
= 100 × ÷ =


Allowance for doubtful accounts
The allowance for doubtful accounts shows a decreasing trend from US$131 million in 2013 to US$95 million in 2015. Data for subsequent years is not available, preventing further analysis beyond 2015.
Financing receivables, gross
Gross financing receivables decreased slightly from US$7,153 million in 2013 to US$6,670 million in 2014, then remained relatively stable at US$6,689 million in 2015. No further data is provided for subsequent years.
Allowance as a percentage of financing receivables, gross
The ratio of allowance for doubtful accounts to gross financing receivables decreased steadily from 1.83% in 2013 to 1.66% in 2014, and further to 1.42% in 2015. This indicates an improving quality of the financing receivables or a more conservative approach towards allowance provisioning during this period.