Analysis of Property, Plant and Equipment
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2009
- Return on Equity (ROE) since 2009
- Current Ratio since 2009
- Price to Book Value (P/BV) since 2009
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Property, Plant and Equipment Disclosure
Fortinet Inc., balance sheet: property, plant and equipment
US$ in thousands
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).
- Land
- The value of land assets has shown a steady increase over the five-year period, rising from 75,700 thousand US dollars in 2018 to 310,000 thousand US dollars in 2022. Notably, the most significant jump occurred between 2020 and 2021, with the value more than doubling, indicating substantial acquisitions or revaluations during that time.
- Buildings and improvements
- Buildings and improvements also experienced a consistent upward trend, moving from 144,200 thousand US dollars in 2018 to 490,300 thousand US dollars in 2022. Similar to land, there was a marked increase between 2020 and 2021, nearly tripling, which points to either major construction activities or capital improvements during this period.
- Computer equipment and software
- This category demonstrated continuous growth throughout the period, starting at 95,900 thousand US dollars in 2018 and reaching 222,700 thousand US dollars by 2022. The increase was steady year-over-year, reflecting ongoing investments in technology and software infrastructure.
- Leasehold improvements
- Leasehold improvements rose gradually from 17,900 thousand US dollars in 2018 to 53,500 thousand US dollars in 2022. The increases were consistent each year, indicating incremental upgrades or expansions in leased property.
- Evaluation units
- Evaluation units saw minor fluctuations, beginning at 20,500 thousand US dollars in 2018 and ending at 19,200 thousand US dollars in 2022. The value declined slightly over the five years, with the lowest point in 2021, suggesting limited additions and potential disposals or impairments.
- Furniture and fixtures
- Furniture and fixtures exhibited steady growth from 15,700 thousand US dollars in 2018 to 31,300 thousand US dollars in 2022, roughly doubling over the period. This suggests ongoing replacement or acquisition consistent with business growth.
- Construction-in-progress
- This item presented notable variability. Starting at 12,300 thousand US dollars in 2018, it surged to a peak of 166,400 thousand US dollars in 2020, indicating significant construction activity underway at that time. However, values dropped sharply in 2021 to 19,900 thousand US dollars before rising again to 51,700 thousand US dollars in 2022, reflecting completion of earlier projects and initiation of new ones.
- Property and equipment, gross
- The total gross property and equipment value increased substantially from 382,200 thousand US dollars in 2018 to 1,178,700 thousand US dollars in 2022. This represents a more than threefold increase over five years, with particularly strong growth between 2020 and 2022, indicative of significant capital expenditures and asset accumulation.
- Accumulated depreciation
- Accumulated depreciation increased in magnitude from -110,800 thousand US dollars in 2018 to -280,200 thousand US dollars in 2022, reflecting the aging of the assets and ongoing depreciation expenses. The consistent increase aligns with the growing asset base.
- Property and equipment, net
- Net property and equipment values grew markedly, rising from 271,400 thousand US dollars in 2018 to 898,500 thousand US dollars in 2022. The most significant jumps occurred between 2020 and 2021, and again between 2021 and 2022, signaling strong investment in fixed assets and effective management of asset depreciation.
Asset Age Ratios (Summary)
Fortinet Inc., asset age ratios
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).
The analysis of the property, plant, and equipment data over the five-year period reveals several notable trends in asset aging and useful life estimation.
- Average Age Ratio
- The average age ratio, expressed as a percentage, shows a downward trend from 36.15% in 2018 to 30.47% in 2021, followed by a slight increase to 32.26% in 2022. This suggests that, overall, the asset base became relatively younger over the initial years but experienced a minor aging reversal in the last reported year.
- Estimated Total Useful Life
- The estimated total useful life of the assets increased steadily from 7 years in 2018 to 11 years by 2021, maintaining that level in 2022. This indicates an extension in the expected longevity of the company’s property, plant, and equipment, possibly reflecting improved asset quality, maintenance, or changes in accounting estimates.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of assets remained stable at 2 to 3 years throughout the period, rising from 2 years in 2018 to 3 years from 2019 onward. This stability suggests a consistent average acquisition age of assets without significant obsolescence or rapid turnover.
- Estimated Remaining Life
- The estimated remaining life of assets progressively increased from 4 years in 2018 to 7 years by 2021, holding steady into 2022. This trend aligns with the increased total useful life figures, indicating that assets are expected to remain operational longer, which could positively impact future depreciation expenses and capital replacement cycles.
Overall, the data depicts a company managing an asset base that is becoming relatively younger and more long-lived. The adjustments in estimated useful life and remaining life suggest a positive reassessment of asset durability, which might influence financial planning and asset management strategies going forward.
Average Age
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Accumulated depreciation | ||||||
| Property and equipment, gross | ||||||
| Land | ||||||
| Asset Age Ratio | ||||||
| Average age1 | ||||||
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).
2022 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property and equipment, gross – Land)
= 100 × ÷ ( – ) =
The financial data on property, plant, and equipment demonstrate several noteworthy trends over the five-year period ending in 2022.
- Accumulated Depreciation
- The accumulated depreciation increased consistently each year, rising from 110,800 thousand US dollars in 2018 to 280,200 thousand US dollars in 2022. This steady growth indicates ongoing utilization and aging of the fixed assets.
- Property and Equipment, Gross
- The gross value of property and equipment showed a substantial upward trend, nearly tripling from 382,200 thousand US dollars in 2018 to 1,178,700 thousand US dollars in 2022. This significant increase suggests considerable investments in property and equipment assets during the period.
- Land
- The value assigned to land also increased markedly, from 75,700 thousand US dollars in 2018 to 310,000 thousand US dollars in 2022. Notably, the value remained stable between 2019 and 2020 but jumped significantly in 2021 and 2022, reflecting likely acquisitions or revaluation.
- Average Age Ratio
- The average age ratio, which represents the proportion of accumulated depreciation relative to the gross property and equipment, showed a gradual decline from 36.15% in 2018 to 30.47% in 2021, followed by a slight increase to 32.26% in 2022. This trend could imply that newer assets have been added at a faster rate than older assets have depreciated, improving the overall asset age profile until 2021, with a minor aging effect in 2022.
Overall, the data reveal a pattern of significant asset growth accompanied by consistent depreciation accumulation. The company's property and equipment base has expanded substantially, supported by increased land holdings. The decreasing average age ratio until 2021 suggests ongoing asset renewal, though a mild reversal in 2022 indicates some aging in the asset base.
Estimated Total Useful Life
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).
2022 Calculations
1 Estimated total useful life = (Property and equipment, gross – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property and Equipment, Gross
- The gross amount of property and equipment displayed a consistent upward trend over the analyzed period. Starting at $382.2 million at the end of 2018, it increased to $481.3 million in 2019, then jumped to $620.5 million in 2020. The growth accelerated in subsequent years, reaching $899.3 million in 2021 and culminating at approximately $1.1787 billion by the end of 2022. This trend indicates significant ongoing investment in fixed assets.
- Land
- Land values increased steadily throughout the period, beginning at $75.7 million in 2018 and rising to $93.3 million in 2019 and 2020. From 2021, the increase was more pronounced, with land recorded at $204.5 million, followed by a further rise to $310 million in 2022. This pattern suggests notable acquisition or revaluation of land assets.
- Depreciation Expense
- The depreciation expense showed a consistent increase each year, from $46.7 million in 2018 to $50.7 million in 2019 and $55.5 million in 2020. The upward trend continued with $65.9 million in 2021, increasing further to $81 million in 2022. The growing depreciation expense reflects the expanding asset base and the aging of fixed assets over time.
- Estimated Total Useful Life
- The estimated total useful life of the assets showed a gradual increase, starting at 7 years in 2018 and moving to 8 years in 2019, then to 9 years in 2020. It then stabilized at 11 years in both 2021 and 2022. This increase could reflect changes in asset composition or the company's updated assumptions regarding asset longevity.
Estimated Age, Time Elapsed since Purchase
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).
2022 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation has exhibited a consistent upward trend over the entire period. Starting from 110,800 thousand US dollars in 2018, it increased each year, reaching 280,200 thousand US dollars by 2022. This steady rise indicates ongoing depreciation of the property, plant, and equipment, reflecting continuous usage and aging of the assets.
- Depreciation Expense
- The annual depreciation expense also shows a clear increasing trend. It began at 46,700 thousand US dollars in 2018 and rose steadily each year, reaching 81,000 thousand US dollars by 2022. This growth in depreciation expense suggests either an increase in the asset base or accelerated usage or wear of the assets over time.
- Time Elapsed since Purchase
- The time elapsed since purchase was 2 years in 2018 and stabilized at 3 years from 2019 onwards, maintaining this value up to 2022. This consistency implies a relatively stable age profile of the assets being depreciated, which may affect the method or rate applied in depreciation calculations.
Estimated Remaining Life
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).
2022 Calculations
1 Estimated remaining life = (Property and equipment, net – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property and Equipment, Net
- The net value of property and equipment exhibited a consistent and significant upward trend from 2018 to 2022. Starting at $271.4 million in 2018, it increased steadily each year to reach $898.5 million by the end of 2022. This reflects a substantial expansion in the company’s asset base over the five-year period.
- Land
- The value of land holdings also increased markedly during the period analyzed. Beginning at $75.7 million in 2018, it rose gradually to $93.3 million in 2019 and remained constant into 2020. Subsequently, it saw a pronounced increase to $204.5 million in 2021 and further to $310.0 million in 2022. This pattern indicates significant land acquisitions or revaluations contributing to the overall asset growth.
- Depreciation Expense
- Depreciation expense showed a steady increase throughout the years, moving from $46.7 million in 2018 to $81.0 million in 2022. The rising depreciation aligns with the increase in the asset base, reflecting ongoing capital investments as well as the aging of existing assets.
- Estimated Remaining Life of Assets
- The estimated remaining life of property, plant, and equipment increased from 4 years in 2018 to 7 years in 2021 and remained stable in 2022. This suggests that newer assets with longer useful lives were added, or existing assets were re-evaluated, effectively extending the average remaining life of the asset base.