Stock Analysis on Net
Stock Analysis on Net

Carrier Global Corp. (NYSE:CARR)

This company has been moved to the archive! The financial data has not been updated since April 26, 2023.

Analysis of Bad Debts

Microsoft Excel

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

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Allowance for expected credit losses 117 88 89
Accounts receivable, gross 2,950 2,491 2,870
Financial Ratio
Allowance as a percentage of accounts receivable, gross1 3.97% 3.53% 3.10%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2022 Calculation
Allowance as a percentage of accounts receivable, gross = 100 × Allowance for expected credit losses ÷ Accounts receivable, gross
= 100 × 117 ÷ 2,950 = 3.97%

An analysis of the allowance for expected credit losses reveals a progressive increase in the credit risk profile from 2020 to 2022. While gross receivables fluctuated during this period, the proportion of funds set aside to cover potential defaults grew consistently.

Allowance for Expected Credit Losses
The nominal value of the allowance remained relatively stable between 2020 and 2021, moving from US$ 89 million to US$ 88 million. However, a significant increase occurred in 2022, with the allowance rising to US$ 117 million, indicating a more aggressive provisioning strategy or an increase in anticipated credit defaults.
Gross Accounts Receivable
Gross receivables experienced a contraction between 2020 and 2021, falling from US$ 2,870 million to US$ 2,491 million. This was followed by a recovery in 2022, where the balance increased to US$ 2,950 million, surpassing the 2020 levels.
Allowance as a Percentage of Gross Receivables
A steady upward trend is observed in the allowance ratio, which rose from 3.10% in 2020 to 3.53% in 2021, and reached 3.97% by the end of 2022. This consistent increase suggests a deteriorating outlook on the recoverability of receivables or a systemic shift toward more conservative credit loss assumptions.

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