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: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Allowance as a percentage of receivables, gross = 100 × Allowances related to accounts receivable ÷ Receivables, gross
= 100 × ÷ =
Financial ratio | Description | The company |
---|---|---|
Allowance as a percentage of receivables, gross | Allowance for doubtful accounts divided by the gross accounts receivable. | Kraft Foods Group Inc. allowance as a percentage of receivables, gross decreased from 2012 to 2013 and from 2013 to 2014. |