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: 2025-09-27), 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).
1 2025 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 has shown a consistent downward trend from 426 million US dollars in 2020 to a low of 83 million in 2024, followed by a slight increase to 90 million in 2025. This indicates an overall improvement in credit risk assessment and management, with a minor reversal in the last year.
- Current receivables, gross
- The gross value of current receivables fluctuated over the examined period. Starting at 13,134 million US dollars in 2020, it slightly increased in 2021, declined in the subsequent two years to reach a low of 12,445 million in 2023, and then rose again to 13,307 million in 2025. These fluctuations suggest varying sales or credit activities during the period, with a recovery noted towards the end.
- Allowance as a percentage of current receivables, gross
- There is a clear declining trend in the allowance for credit losses as a percentage of gross current receivables. From 3.24% in 2020, the ratio steadily decreased each year, reaching a low of 0.65% in 2024, and marginally increased to 0.68% in 2025. This trend aligns with the observations on the absolute allowance figures and indicates improving credit quality or more conservative provisioning over time.