Stock Analysis on Net

Union Pacific Corp. (NYSE:UNP)

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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 millions)
Allowance for doubtful accounts
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 doubtful accounts ÷ Accounts receivable, gross
= 100 × ÷ =


Allowance for Doubtful Accounts
The allowance for doubtful accounts shows a consistent downward trend over the five-year period. Starting at 17 million USD in 2020, it decreased to 6 million USD by 2024. This represents a significant reduction, suggesting improved credit risk management or a lower expected level of uncollectible accounts.
Accounts Receivable, Gross
Gross accounts receivable increased steadily from 1,522 million USD in 2020 to a peak of 2,082 million USD in 2023, followed by a slight decline to 1,900 million USD in 2024. This pattern indicates growth in sales or credit extensions until 2023, with a minor reduction in the final year possibly due to tighter credit policies or improved collections.
Allowance as a Percentage of Accounts Receivable, Gross
The allowance as a percentage of gross accounts receivable exhibited a continuous decline from 1.12% in 2020 to 0.32% in 2024. This substantial decrease aligns with the reduction in the total allowance, indicating a lower relative provision against the growing receivables. It suggests increasing confidence in the collectability of receivables or changes in risk assessment methodologies.