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.
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts ÷ Accounts receivable, gross
= 100 × ÷ =
The allowance for doubtful accounts receivable exhibited an initial increase followed by stabilization and a slight decline over the five-year period. Accounts receivable, gross, demonstrated consistent growth, with a minor decrease observed in the most recent year. The allowance as a percentage of gross accounts receivable fluctuated, indicating a changing risk assessment related to collectibility.
- Allowance for Doubtful Accounts
- The allowance for doubtful accounts increased from US$51 million in 2021 to US$80 million in 2022, representing a 56.86% rise. Further growth was observed in 2023, reaching US$91 million. The allowance remained relatively stable at US$95 million in 2024 before decreasing slightly to US$91 million in 2025. This suggests an initial period of increased credit risk perception, followed by a period of consistent risk management, and a minor reduction in anticipated uncollectible amounts.
- Accounts Receivable, Gross
- Gross accounts receivable increased steadily from US$2,490 million in 2021 to US$3,495 million in 2023, indicating growth in sales or changes in payment terms. A slight decrease to US$3,428 million was noted in 2024, potentially due to improved collection efforts or a seasonal slowdown. The final year, 2025, saw an increase to US$3,918 million, resuming the overall upward trend.
- Allowance as a Percentage of Accounts Receivable, Gross
- This ratio began at 2.05% in 2021 and rose to 2.80% in 2022, signifying a heightened concern regarding the collectibility of receivables relative to the total outstanding amount. The ratio decreased to 2.60% in 2023 and then increased slightly to 2.77% in 2024. A decrease to 2.32% in 2025 was observed, suggesting improved credit quality or a more optimistic outlook on collections despite the increase in gross receivables.
The observed trends suggest a dynamic relationship between the allowance for doubtful accounts and gross accounts receivable. While receivables have generally increased, the company has managed its allowance to reflect changing credit conditions and collection expectations. The recent decrease in the percentage suggests a potentially improved receivables profile or a shift in accounting policies.