Stock Analysis on Net

Sherwin-Williams Co. (NYSE:SHW)

$24.99

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, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in thousands)
Allowance for current expected credit losses
Accounts receivable, gross
Financial Ratio
Allowance as a percentage of accounts receivable, gross1

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for current expected credit losses ÷ Accounts receivable, gross
= 100 × ÷ =


The financial data reveals several noteworthy trends in the company's credit loss allowance and accounts receivable over the five-year period from 2020 to 2024.

Allowance for current expected credit losses
This figure experienced a decrease from 53,500 thousand US dollars in 2020 to 48,900 thousand in 2021, followed by a steady increase through 2024, reaching 60,400 thousand US dollars. This pattern suggests an initial reduction in expected credit losses was reassessed, with subsequent rising levels indicating a more cautious or deteriorating credit outlook in recent years.
Accounts receivable, gross
Gross accounts receivable showed significant growth from 2,131,600 thousand US dollars in 2020 to a peak of 2,620,200 thousand in 2022. After this peak, there was a decline over the following two years, with the figure falling to 2,449,200 thousand by 2024. This trend may reflect variations in sales volume, credit extensions, or collection efficiency.
Allowance as a percentage of accounts receivable, gross
The allowance ratio started at 2.51% in 2020 and declined to a low of 2.04% in 2021. Thereafter, it gradually climbed back upward each year, reaching 2.47% by 2024. This indicates that despite fluctuations in absolute allowance and receivables, the relative provision for credit losses has generally trended upwards since 2021, potentially signaling increased credit risk or a more conservative provisioning policy.