Stock Analysis on Net

Time Warner Cable Inc. (NYSE:TWC)

$22.49

This company has been moved to the archive! The financial data has not been updated since April 28, 2016.

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, 2015 Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011
Selected Financial Data (US$ in millions)
Allowance for doubtful accounts
Receivables, gross
Financial Ratio
Allowance as a percentage of receivables, gross1

Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).

1 2015 Calculation
Allowance as a percentage of receivables, gross = 100 × Allowance for doubtful accounts ÷ Receivables, gross
= 100 × ÷ =


The financial data indicates several notable trends relating to the allowance for doubtful accounts and gross receivables over the five-year period ending in 2015.

Allowance for Doubtful Accounts
The allowance for doubtful accounts showed a generally increasing trend, rising from $62 million in 2011 to a peak of $109 million in 2014, before declining to $94 million in 2015. This suggests that the company experienced a growing expectation of uncollectible accounts through 2014, with a moderate reduction in the last reported year.
Receivables, Gross
Gross receivables increased steadily from $829 million in 2011 to $1,058 million in 2014, reflecting growth in the company’s outstanding receivables. However, in 2015, gross receivables decreased slightly to $1,010 million, indicating a potential tightening or reduction in sales or credit extended.
Allowance as a Percentage of Gross Receivables
The ratio of allowance to gross receivables remained relatively stable between 6.86% and 7.48% from 2011 through 2013, but then experienced a significant increase to 10.3% in 2014, signaling a rise in the proportion of receivables considered doubtful. In 2015, this percentage moderated somewhat to 9.31%, still noticeably higher than in earlier years, which could reflect more conservative credit risk assessments or increased concerns about collectibility.

Overall, the data suggest that the company faced increasing credit risk or a rise in doubtful accounts particularly from 2013 to 2014, resulting in a substantial increase in the allowance relative to receivables. Although the allowance decreased in absolute terms in 2015, it remained elevated as a percentage of gross receivables, indicating ongoing caution regarding credit losses despite a slight contraction in receivables. The patterns imply active management of credit risk and adjustments to allowances reflecting changes in expected credit losses over the period analyzed.