Stock Analysis on Net

Norfolk Southern Corp. (NYSE:NSC)

$22.49

This company has been moved to the archive! The financial data has not been updated since April 27, 2022.

Analysis of Bad Debts

Microsoft Excel

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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Allowance for Doubtful Accounts Receivable

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in millions)
Allowance for doubtful accounts
Accounts receivable, gross
Financial Ratio
Allowance as a percentage of accounts receivable, gross1

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

1 2021 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 showed minor fluctuations over the five-year period. It remained stable at 7 million USD in 2017 and 2018, increased slightly to 9 million USD in 2019, dropped to 6 million USD in 2020, and then rose again to 8 million USD in 2021. This suggests a moderate variability in expected uncollectible receivables, with a noticeable decrease during 2020 likely reflecting either improved credit management or changes in receivable composition during that year.
Accounts Receivable, Gross
The gross accounts receivable exhibited a declining trend from 2018 onwards, after an initial rise from 962 million USD in 2017 to 1016 million USD in 2018. Subsequently, it decreased to 929 million USD in 2019 and further down to 854 million USD in 2020. In 2021, there was a rebound to 984 million USD, approaching the earlier higher levels. This pattern indicates fluctuations in credit sales or customer payment cycles, with a dip during 2020 possibly correlated with broader economic conditions.
Allowance as a Percentage of Accounts Receivable, Gross
The allowance ratio relative to gross accounts receivable remained relatively low and stable across the period but showed modest variability. It started at 0.73% in 2017, slightly decreased to 0.69% in 2018, then increased to the highest point of 0.97% in 2019. The ratio decreased again to 0.70% in 2020 before rising to 0.81% in 2021. This suggests a generally consistent policy for doubtful accounts with some adjustments likely reflecting changes in credit risk or economic conditions affecting customer payment behavior.