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.
Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 2021 Calculation
Allowance as a percentage of accounts receivable from third parties = 100 × Allowance for credit loss ÷ Accounts receivable from third parties
= 100 × 2 ÷ 925 = 0.22%
Financial ratio | Description | The company |
---|---|---|
Allowance as a percentage of accounts receivable from third parties | Allowance for doubtful accounts divided by the gross accounts receivable. | NXP Semiconductors N.V. allowance as a percentage of accounts receivable from third parties decreased from 2019 to 2020 and from 2020 to 2021. |