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Microsoft Excel LibreOffice Calc

Thermo Fisher Scientific Inc. (TMO)

Analysis of Bad Debts

Difficulty: Advanced

Allowance for doubtful accounts receivable (bad debts) is a contra account which reduce the balance of the company’s 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.

Receivables Accounting Policy

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. Thermo Fisher maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to pay amounts due. The allowance for doubtful accounts is Thermo Fisher’s best estimate of the amount of probable credit losses in existing accounts receivable. Thermo Fisher determines the allowance based on the age of the receivable, the creditworthiness of the customer and any other information that is relevant to the judgment. Account balances are charged off against the allowance when Thermo Fisher believes it is probable the receivable will not be recovered. Thermo Fisher does not have any off-balance-sheet credit exposure related to customers.

Source: 10-K (filing date: 2019-02-27).

Allowance for Doubtful Accounts Receivable

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Allowance for doubtful accounts hidden hidden hidden hidden hidden
Accounts receivable, gross hidden hidden hidden hidden hidden
Allowance as a percentage of accounts receivable, gross1 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-26).

2018 Calculations

1 Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Allowance as a percentage of accounts receivable, gross Allowance for doubtful accounts divided by the gross accounts receivable. Thermo Fisher Scientific Inc.’s allowance as a percentage of accounts receivable, gross increased from 2016 to 2017 and from 2017 to 2018.