Stock Analysis on Net

ServiceNow Inc. (NYSE:NOW)

Analysis of Bad Debts

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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.


Allowance for Doubtful Accounts Receivable

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in thousands)
Allowance for doubtful accounts 8,608  6,196  4,649  3,115  2,323 
Accounts receivable, gross 1,018,023  841,475  579,459  438,010  325,080 
Financial Ratio
Allowance as a percentage of accounts receivable, gross1 0.85% 0.74% 0.80% 0.71% 0.71%

Based on: 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), 10-K (reporting date: 2016-12-31).

1 2020 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × 8,608 ÷ 1,018,023 = 0.85%

Financial ratio Description The company
Allowance as a percentage of accounts receivable, gross Allowance for doubtful accounts divided by the gross accounts receivable. ServiceNow Inc. allowance as a percentage of accounts receivable, gross decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.