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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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-28).
1 2023 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for expected credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
- Allowance for Expected Credit Losses
- The allowance for expected credit losses showed an overall increase from 2019 to 2023, rising from 10 million USD to 16 million USD. There was a peak in 2020 at 19 million USD, followed by a decrease in the subsequent two years before a slight rise again in 2023.
- Accounts Receivable, Gross
- Gross accounts receivable exhibited some fluctuations during the analyzed period. Starting at 1,586 million USD in 2019, the figure decreased slightly by 2021 to 1,504 million USD, increased notably in 2022 to 1,749 million USD, and then declined again to 1,584 million USD in 2023.
- Allowance as a Percentage of Accounts Receivable, Gross
- This ratio indicates the proportion of estimated credit losses relative to the gross accounts receivable. It showed an increasing trend from 0.63% in 2019 to a peak of 1.22% in 2020, then declined to 0.74% in 2022 before rising again to 1.01% in 2023. The trend suggests a cautious approach in estimating credit risk that became more conservative in 2020, relaxed subsequently, and increased slightly again in the most recent year.