Microsoft Excel LibreOffice Calc

Analysis of Property, Plant and Equipment

Difficulty: Advanced


Property, Plant and Equipment Accounting Policy

Property and equipment are stated at cost, less accumulated depreciation or amortization, whenever applicable. Depreciation and amortization expenses for property and equipment were approximately $1.1 billion, $1.1 billion, and $1.0 billion for fiscal 2018, 2017, and 2016, respectively. Depreciation and amortization are computed using the straight-line method, generally over the following periods:

Asset Category Period
Buildings 25 years
Building improvements 10 years
Leasehold improvements Shorter of remaining lease term or up to 10 years
Computer equipment and related software 30 to 36 months
Production, engineering, and other equipment Up to 5 years
Operating lease assets Based on lease term
Furniture and fixtures 5 years

Source: 10-K (filing date: 2018-09-06).


Property, Plant and Equipment Disclosure

Cisco Systems Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

Microsoft Excel LibreOffice Calc
Jul 28, 2018 Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013
Land, buildings, and building and leasehold improvements 4,710  4,926  4,778  4,495  4,468  4,426 
Computer equipment and related software 1,085  1,258  1,288  1,310  1,425  1,416 
Production, engineering, and other equipment 5,734  5,707  5,658  5,753  5,756  5,721 
Operating lease assets 356  356  296  372  362  326 
Furniture and fixtures 358  572  543  497  509  497 
Gross property and equipment 12,243  12,819  12,563  12,427  12,520  12,386 
Accumulated depreciation and amortization (9,237) (9,497) (9,057) (9,095) (9,268) (9,064)
Property and equipment, net 3,006  3,322  3,506  3,332  3,252  3,322 

Based on: 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).

Item Description The company
Gross property and equipment Amount before accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures. Cisco Systems Inc.'s gross property and equipment increased from 2016 to 2017 but then declined significantly from 2017 to 2018.
Property and equipment, net Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures. Cisco Systems Inc.'s property and equipment, net declined from 2016 to 2017 and from 2017 to 2018.

Property, Plant and Equipment Ratios (Summary)

Cisco Systems Inc., Property, Plant and Equipment Ratios

Microsoft Excel LibreOffice Calc
Jul 28, 2018 Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013
Average age 75.45% 74.09% 72.09% 73.19% 74.03% 73.18%
Estimated total useful life (years) 11 12 13 11 10 10
Estimated age, time elapsed since purchase (years) 8 9 9 8 8 8
Estimated remaining life (years) 3 3 4 3 3 3

Based on: 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).

Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. Cisco Systems Inc.'s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.
Estimated total useful life Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors. Cisco Systems Inc.'s estimated total useful life of depreciable property, plant and equipment declined from 2016 to 2017 and from 2017 to 2018.
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Cisco Systems Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2016 to 2017 and from 2017 to 2018.
Estimated remaining life Cisco Systems Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2016 to 2017 and from 2017 to 2018.

Average Age

Microsoft Excel LibreOffice Calc
Jul 28, 2018 Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013
Selected Financial Data (USD $ in millions)
Accumulated depreciation and amortization 9,237  9,497  9,057  9,095  9,268  9,064 
Gross property and equipment 12,243  12,819  12,563  12,427  12,520  12,386 
Ratio
Average age1 75.45% 74.09% 72.09% 73.19% 74.03% 73.18%

Based on: 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).

2018 Calculations

1 Average age = 100 × Accumulated depreciation and amortization ÷ Gross property and equipment
= 100 × 9,237 ÷ 12,243 = 75.45%

Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. Cisco Systems Inc.'s average age of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.

Estimated Total Useful Life

Microsoft Excel LibreOffice Calc
Jul 28, 2018 Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013
Selected Financial Data (USD $ in millions)
Gross property and equipment 12,243  12,819  12,563  12,427  12,520  12,386 
Depreciation and amortization expenses for property and equipment 1,100  1,100  1,000  1,100  1,200  1,200 
Ratio
Estimated total useful life (years)1 11 12 13 11 10 10

Based on: 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).

2018 Calculations

1 Estimated total useful life (years) = Gross property and equipment ÷ Depreciation and amortization expenses for property and equipment
= 12,243 ÷ 1,100 = 11

Ratio Description The company
Estimated total useful life Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors. Cisco Systems Inc.'s estimated total useful life of depreciable property, plant and equipment declined from 2016 to 2017 and from 2017 to 2018.

Estimated Age, Time Elapsed since Purchase

Microsoft Excel LibreOffice Calc
Jul 28, 2018 Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013
Selected Financial Data (USD $ in millions)
Accumulated depreciation and amortization 9,237  9,497  9,057  9,095  9,268  9,064 
Depreciation and amortization expenses for property and equipment 1,100  1,100  1,000  1,100  1,200  1,200 
Ratio
Time elapsed since purchase (years)1 8 9 9 8 8 8

Based on: 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).

2018 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation and amortization ÷ Depreciation and amortization expenses for property and equipment
= 9,237 ÷ 1,100 = 8

Ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Cisco Systems Inc.'s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2016 to 2017 and from 2017 to 2018.

Estimated Remaining Life

Microsoft Excel LibreOffice Calc
Jul 28, 2018 Jul 29, 2017 Jul 30, 2016 Jul 25, 2015 Jul 26, 2014 Jul 27, 2013
Selected Financial Data (USD $ in millions)
Property and equipment, net 3,006  3,322  3,506  3,332  3,252  3,322 
Depreciation and amortization expenses for property and equipment 1,100  1,100  1,000  1,100  1,200  1,200 
Ratio
Estimated remaining life (years)1 3 3 4 3 3 3

Based on: 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).

2018 Calculations

1 Estimated remaining life (years) = Property and equipment, net ÷ Depreciation and amortization expenses for property and equipment
= 3,006 ÷ 1,100 = 3

Ratio Description The company
Estimated remaining life Cisco Systems Inc.'s estimated remaining life of depreciable property, plant and equipment declined from 2016 to 2017 and from 2017 to 2018.