Microsoft Excel LibreOffice Calc

Linde plc (LIN)


Analysis of Bad Debts

High level of difficulty

Allowance for doubtful accounts receivable (bad debts) is a contra account which reduce the balance of the company’s 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 LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (US$ in millions)
Allowance for doubtful accounts 113  138  121  101  102 
Accounts receivable, gross 4,410  1,942  1,762  1,702  1,898 
Ratio
Allowance as a percentage of accounts receivable, gross1 2.56% 7.11% 6.87% 5.93% 5.37%

Based on: 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).

2018 Calculations

1 Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × 113 ÷ 4,410 = 2.56%

Ratio Description The company
Allowance as a percentage of accounts receivable, gross Allowance for doubtful accounts divided by the gross accounts receivable. Linde plc’s allowance as a percentage of accounts receivable, gross increased from 2016 to 2017 but then declined significantly from 2017 to 2018.