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.
Paying user area
Try for free
Kinder Morgan Inc. pages available for free this week:
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Operating Profit Margin since 2010
- Return on Equity (ROE) since 2010
- Return on Assets (ROA) since 2010
- Price to Operating Profit (P/OP) since 2010
- Price to Book Value (P/BV) since 2010
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Kinder Morgan Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 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 marked downward trend from 2015 to 2018, decreasing from 91 million US dollars in 2015 to just 3 million US dollars in 2018. There is a slight increase in 2019, reaching 9 million US dollars, but the figure remains significantly lower than the initial value in 2015.
- Accounts Receivable, Gross
- The gross accounts receivable demonstrates relative stability over the observed period, with minor fluctuations. Starting at 1406 million US dollars in 2015, it slightly increased to a peak of 1501 million US dollars in 2018 before declining somewhat to 1379 million US dollars in 2019.
- Allowance as a Percentage of Accounts Receivable, Gross
- This ratio declines sharply from 6.47% in 2015 to 0.20% in 2018, indicating a significant reduction in the estimated uncollectible portion relative to the gross accounts receivable. In 2019, there is a minor increase to 0.65%, although the overall percentage remains substantially lower compared to the earlier years.
- Overall Analysis
- The data suggests a strong improvement in the quality of accounts receivable, as the allowance for doubtful accounts and its percentage relative to gross receivables have significantly decreased over the period. Despite stable gross receivables, the company has considerably lowered its expected credit losses, indicating either enhanced credit management or improved customer payment behaviors. The slight uptick in 2019 may warrant monitoring but does not substantially alter the overall positive trend observed in credit risk metrics.