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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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Price to Operating Profit (P/OP) since 2005
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30), 10-K (reporting date: 2020-04-24).
1 2025 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowances and credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
The financial data reveals several notable trends regarding accounts receivable and allowances over the six-year period from April 2020 to April 2025.
- Accounts Receivable, Gross
- There is a consistent upward trend in the gross accounts receivable figures, increasing from 4,853 million US dollars in April 2020 to 6,714 million US dollars in April 2025. This steady growth reflects an expanding volume of credit sales or receivables outstanding over the years.
- Allowances and Credit Losses
- The allowances and credit losses exhibit a fluctuating pattern. Beginning at 208 million US dollars in April 2020, the figure rises to a peak of 241 million in April 2021, then declines to 173 million by April 2024 before increasing slightly to 199 million in April 2025. This indicates an initial increase in expected credit losses followed by a reduction, potentially reflecting improved credit management or collection efforts, before a mild increase in the most recent year.
- Allowance as a Percentage of Accounts Receivable, Gross
- This ratio shows a clear decreasing trend over the analyzed period. It starts at 4.29% in April 2020 and continuously declines to a low of 2.75% in April 2024, subsequently rising slightly to 2.96% in April 2025. This reduction over time suggests that the proportion of doubtful accounts relative to the total receivables is diminishing, which could imply improving credit quality or more favorable collection experience.
Overall, the data indicates that while the total accounts receivable are growing steadily, the related allowances for doubtful accounts are decreasing both in absolute terms (after peaking in 2021) and as a percentage of receivables. This trend points toward improve credit risk profile or enhanced efficiency in managing receivables during the period under review.