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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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Cash Flow Statement
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Debt to Equity since 2005
- Price to Operating Profit (P/OP) since 2005
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Allowance for Doubtful Accounts Receivable
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for doubtful accounts and sales allowances ÷ Accounts receivable, gross
= 100 × ÷ =
- Allowance for doubtful accounts and sales allowances
- The allowance shows a fluctuating trend over the five-year period. It started at 23,100 thousand US dollars in 2018, decreased to 20,300 thousand in 2019, peaked at 29,100 thousand in 2020, then declined steadily to 19,700 thousand in 2021 and further to 16,600 thousand in 2022. This indicates a reduction in estimated uncollectible accounts following the 2020 peak.
- Accounts receivable, gross
- Gross accounts receivable increased from 723,900 thousand US dollars in 2018 to a high of 892,100 thousand in 2020, showing growth during this period. However, it declined to 859,100 thousand in 2021 and more significantly to 741,100 thousand in 2022. This suggests a contraction in receivables after 2020.
- Allowance as a percentage of accounts receivable, gross
- This metric decreased from 3.19% in 2018 to 2.5% in 2019, increased again to 3.26% in 2020, and then steadily fell to 2.29% in 2021 and 2.24% in 2022. The percentage peaked in 2020, coinciding with the highest allowance amount, and declined thereafter, implying improved credit quality or more conservative allowance policies post-2020.