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.
Allowance for Doubtful Accounts Receivable
Based on: 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), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Allowance as a percentage of accounts receivable and accrued receivables, gross = 100 × Allowance for expected credit loss ÷ Accounts receivable and accrued receivables, gross
= 100 × 200 ÷ 129,171 = 0.15%
The financial data indicates a significant expansion in gross accounts receivable and accrued receivables from 2020 to 2023, contrasted by a very conservative allowance for expected credit losses. This suggests a high level of confidence in the collectability of receivables or a client base with an exceptionally low default risk.
- Gross Accounts Receivable Trajectory
- A substantial increase in gross receivables is observed, rising from 48,316 thousand US dollars in 2020 to 129,171 thousand US dollars by the end of 2023. This represents an approximate 167% increase over the four-year period, with the most pronounced growth occurring between 2020 and 2021.
- Allowance for Expected Credit Loss Trends
- The allowance for expected credit loss has remained minimal and relatively static. The reserve held constant at 100 thousand US dollars during 2020 and 2021, before doubling to 200 thousand US dollars in 2022 and maintaining that level through 2023.
- Analysis of Credit Loss Percentage
- The allowance as a percentage of gross receivables remains consistently low, fluctuating within a narrow band between 0.10% and 0.21%. Despite the rapid growth in total receivables, the allowance percentage decreased from 0.21% in 2020 to 0.15% in 2023, indicating that the growth in credit exposure has not been matched by a proportional increase in perceived credit risk.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?