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
Linde plc pages available for free this week:
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Linde plc for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
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 trade and other receivables, gross = 100 × Allowance for expected credit losses ÷ Trade and other receivables, gross
= 100 × ÷ =
- Allowance for expected credit losses
- The allowance decreased from 471 million USD at the end of 2020 to 405 million USD by the end of 2021 and remained stable through 2022. It then increased to 457 million USD in 2023 before declining again to 421 million USD in 2024. This pattern indicates some fluctuation in the estimates for expected credit losses over the observed periods, with a notable rise in 2023 followed by a reduction in the most recent year.
- Trade and other receivables, gross
- The gross trade and other receivables exhibited a generally upward trend from 4638 million USD at the end of 2020 to a peak of 5175 million USD in 2023, before slightly decreasing to 5043 million USD in 2024. This suggests an overall increase in receivables over the five-year span, reflecting potential growth in sales, credit sales, or the company's operational scale, with a minor decline in the final year.
- Allowance as a percentage of trade and other receivables, gross
- The allowance as a percentage of gross trade and other receivables declined significantly from 10.16% in 2020 to around 8.26% in 2021, maintaining a similar level at 8.16% in 2022. A moderate increase to 8.83% occurred in 2023, followed by a decrease to 8.35% in 2024. This indicates improved credit quality relative to receivables from 2020 to 2022, a slight deterioration or conservative adjustment in 2023, and a partial improvement again in 2024.
- Overall analysis
- The data reveals that while gross receivables have generally increased, the company has adjusted its allowance for credit losses moderately over time, aligning with changes in receivables and possibly reflecting evolving credit risk management. The allowance percentage trend suggests a generally cautious but improving credit outlook with minor fluctuations, indicating responsiveness to credit risk conditions rather than a consistent degradation or improvement. The increase in allowance in 2023 may reflect a temporary rise in expected credit losses, followed by a reduction in 2024 possibly due to credit recoveries or improved risk assessment.