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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- Income Statement
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- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 2025 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for uncollectible accounts receivable ÷ Accounts receivable, gross
= 100 × ÷ =
- Allowance for Uncollectible Accounts Receivable
- The allowance for uncollectible accounts receivable shows a significant decreasing trend from 214 million USD in 2020 to 27 million USD in 2025, indicating improved credit quality or more conservative recognition of potential credit losses over the observed period.
- Gross Accounts Receivable
- Gross accounts receivable fluctuated through the years, rising sharply from 2963 million USD in 2020 to a peak of 4701 million USD in 2022. Subsequently, there was a decline in 2023 to 4166 million USD, followed by a recovery to 4744 million USD in 2025, reflecting variability in sales or credit extended to customers.
- Allowance as a Percentage of Gross Accounts Receivable
- The allowance as a percentage of gross accounts receivable has consistently declined from 7.22% in 2020 to 0.57% in 2025. This decreasing ratio suggests a reduction in the proportion of doubtful accounts relative to total receivables, which may imply enhanced collection processes or a decrease in the riskiness of the receivables portfolio.