Stock Analysis on Net

Walt Disney Co. (NYSE:DIS)

$24.99

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
Sep 28, 2024 Sep 30, 2023 Oct 1, 2022 Oct 2, 2021 Oct 3, 2020 Sep 28, 2019
Selected Financial Data (US$ in millions)
Allowance for credit losses
Current receivables, gross
Financial Ratio
Allowance as a percentage of current receivables, gross1

Based on: 10-K (reporting date: 2024-09-28), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03), 10-K (reporting date: 2019-09-28).

1 2024 Calculation
Allowance as a percentage of current receivables, gross = 100 × Allowance for credit losses ÷ Current receivables, gross
= 100 × ÷ =


Allowance for Credit Losses
The allowance for credit losses initially increased significantly from 295 million USD in 2019 to a peak of 426 million USD in 2020. Following this peak, the allowance consistently decreased each year, reaching 83 million USD by 2024. This pattern suggests that the company increased its provisions during 2020, likely in response to heightened credit risk, but subsequently reduced these provisions as credit loss expectations improved over the following years.
Current Receivables, Gross
Gross current receivables showed a downward trend from 15,776 million USD in 2019 to 12,810 million USD in 2022. After 2022, there was a slight decline to 12,445 million USD in 2023, followed by a modest increase to 12,812 million USD in 2024. Overall, the gross receivables decreased over the period, indicating either more stringent credit policies, improved collections, or reduced sales on credit.
Allowance as a Percentage of Current Receivables, Gross
This ratio rose sharply from 1.87% in 2019 to 3.24% in 2020, reflecting the increase in the allowance relative to receivables, possibly due to heightened anticipated credit losses during that period. From 2021 onwards, the ratio declined consistently, falling to 0.65% by 2024. This downward trend indicates improved credit quality or reduced risk associated with receivables in recent years.
Summary of Trends
Overall, the data reveals a pattern of heightened credit risk concerns in 2020, followed by a steady improvement. The allowance for credit losses was increased sharply during 2020 but then reduced significantly as conditions normalized. Gross receivables declined overall, possibly pointing to more conservative credit management or reduced sales on credit terms. The allowance as a percentage of receivables peaked in 2020 but has since decreased to a lower level than in 2019, indicating stronger credit quality or better risk mitigation.