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.

Allowance for Doubtful Accounts Receivable

Allowance for Doubtful Accounts Receivable

	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017
Selected Financial Data (US$ in thousands)
Allowance for credit losses	9,942)	12,078)	11,644)	8,874)	9,672)	14,336)
Trade accounts receivable, gross	2,351,446)	2,195,672)	1,866,042)	2,139,928)	2,155,189)	1,945,087)
Financial Ratio
Allowance as a percentage of trade accounts receivable, gross¹	0.42%	0.55%	0.62%	0.41%	0.45%	0.74%

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

¹ 2022 Calculation
Allowance as a percentage of trade accounts receivable, gross = 100 × Allowance for credit losses ÷ Trade accounts receivable, gross
= 100 × 9,942 ÷ 2,351,446 = 0.42%

Financial ratio	Description	The company
Allowance as a percentage of trade accounts receivable, gross	Allowance for doubtful accounts divided by the gross accounts receivable.	Parker-Hannifin Corp. allowance as a percentage of trade accounts receivable, gross decreased from 2020 to 2021 and from 2021 to 2022.

Parker-Hannifin Corp. (NYSE:PH)

Analysis of Bad Debts

Allowance for Doubtful Accounts Receivable