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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- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2009
- Total Asset Turnover since 2009
- Price to Sales (P/S) since 2009
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2024-11-03), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-11-01), 10-K (reporting date: 2019-11-03).
1 2024 Calculation
Allowance as a percentage of trade accounts receivable, gross = 100 × Allowances for doubtful accounts ÷ Trade accounts receivable, gross
= 100 × ÷ =
The analysis of the financial data reveals limited information due to missing values in several key areas. The most complete data pertains to trade accounts receivable on a gross basis across six reporting periods.
- Trade accounts receivable, gross (US$ in millions)
- There is a noticeable downward trend from 2019 through 2021, with the balance decreasing from 3,259 million in November 2019 to a low of 2,071 million in October 2021. This represents a significant reduction over this two-year span.
- Following 2021, the trade accounts receivable balance reverses to an upward trend, increasing to 2,958 million in 2022 and then moderately to 3,154 million in 2023. The largest increase occurs between 2023 and 2024, where the balance rises sharply to 4,416 million.
- This fluctuation suggests variability in the company's credit sales or collection policies over the periods, with a period of contraction followed by substantial expansion in receivables.
- Allowances for doubtful accounts and related percentages
- No data is available for allowances for doubtful accounts or the allowance as a percentage of trade accounts receivable. This lack of information limits the ability to assess credit risk and the adequacy of provisions for potential credit losses linked to the trade receivables.
In summary, the observable trend indicates a volatile pattern in accounts receivable levels, with an initial decline and then an accelerated increase, especially in the most recent year. The missing allowance data prevents a comprehensive analysis of credit risk management or changes in credit quality during the period under review.