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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- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Net Profit Margin since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
- Analysis of Debt
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Allowance for Doubtful Accounts Receivable
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 credit losses ÷ Accounts receivable, gross
= 100 × ÷ =
- Allowance for Credit Losses
- The allowance for credit losses demonstrates a fluctuating pattern over the five-year period. It decreased from 138 million USD at the end of 2020 to 128 million USD in 2021, then increased to 146 million USD in 2022. After that, it declined again to 126 million USD in 2023 and rose to 136 million USD in 2024. These variations suggest adjustments in the reserve possibly in response to changing expectations of credit risk.
- Accounts Receivable, Gross
- The gross accounts receivable showed an overall increasing trend from 10,888 million USD in 2020 to a peak of 12,729 million USD in 2022. However, after 2022, it declined consecutively to 11,342 million USD in 2023 and further to 11,007 million USD in 2024. This pattern indicates growth in credit sales or billing through 2022, followed by a reduction that could reflect changes in sales volume, collection efficiency, or credit policies.
- Allowance as a Percentage of Accounts Receivable, Gross
- The allowance as a percentage of gross accounts receivable fluctuated within a narrow range. It started at 1.27% in 2020, decreased to 1.01% in 2021, increased again to 1.15% in 2022, slightly declined to 1.11% in 2023, and rose once more to 1.24% in 2024. These variations parallel the allowance for credit losses movements and suggest a generally stable but responsive provisioning approach relative to the size of receivables.