Analysis of Property, Plant and Equipment
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- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2008
- Return on Equity (ROE) since 2008
- Return on Assets (ROA) since 2008
- Price to Earnings (P/E) since 2008
- Price to Operating Profit (P/OP) since 2008
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Property, Plant and Equipment Disclosure
Warner Bros. Discovery Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 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), 10-K (reporting date: 2017-12-31).
The analysis of property, plant, and equipment data over the five-year period reveals several distinct trends and dynamics across various asset categories.
- Broadcast equipment
- Values remained relatively stable, fluctuating modestly around the 700 million US$ mark. There was a slight decline from 728 million in 2017 to 672 million in 2021, indicating a minor reduction or possible asset disposals or write-downs in this category over time.
- Office equipment, furniture, fixtures, and other
- This category showed an initial upward trend, increasing from 431 million in 2017 to a peak of 606 million in 2019. However, it then decreased to 467 million by 2021, suggesting a period of acquisition followed by partial asset retirements or disposal activities.
- Capitalized software costs
- There was a strong and consistent increase across all years, rising from 379 million in 2017 to 904 million in 2021. This reflects significant and ongoing investments in software development or acquisition, highlighting a growing focus on digital or technology assets.
- Land, buildings and leasehold improvements
- Values fluctuated but ended with an overall increase from 363 million in 2017 to 481 million in 2021. The dip noted in 2019 to 298 million might indicate a revaluation, disposal, or lower capital expenditures that year, followed by renewed investments or reclassifications in subsequent years.
- Assets under construction
- This line item has data only for 2020 and 2021, showing 285 million and 141 million respectively. The presence in these years suggests ongoing projects or capital works in progress, with a notable reduction in 2021 implying completion or transfer of these assets into the fixed asset categories.
- Property and equipment, at cost
- This aggregate measure consistently increased from 1,901 million in 2017 to 2,665 million in 2021, reflecting overall growth in asset holdings and capital investments throughout the period.
- Accumulated depreciation
- Though a negative figure, it decreased in magnitude from -1,304 million in 2017 to -1,329 million in 2021, with some fluctuations in between. This indicates increasing depreciation charges over time as assets age, balanced against new capital expenditures.
- Property and equipment, net
- Net book value demonstrated a steady rise from 597 million in 2017 to 1,336 million in 2021. This signifies the combined effect of asset additions outpacing depreciation expenses, resulting in an increased net asset base.
In summary, the data reflects a strategic emphasis on technology-related assets, as seen in capitalized software costs, alongside sustained investments in tangible assets. The gradual net increase in property and equipment underscores a growing fixed asset base, while the depreciation pattern aligns with normal asset aging and renewal processes. The appearance and subsequent reduction of assets under construction portray active capital project development and asset capitalization within the analyzed timeframe.
Asset Age Ratios (Summary)
Warner Bros. Discovery Inc., asset age ratios
Based on: 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), 10-K (reporting date: 2017-12-31).
- Average Age Ratio
- The average age ratio shows a consistent downward trend over the five-year period, decreasing from 68.6% in 2017 to 49.87% in 2021. This decline suggests that the asset base is becoming relatively younger, indicating possible recent investments or asset retirements that have reduced the proportion of older assets.
- Estimated Total Useful Life
- The estimated total useful life fluctuated within a narrow range, starting at 13 years in 2017, decreasing sharply to 9 years in 2018, slightly increasing to 10 years in both 2019 and 2020, and then returning to 9 years in 2021. These changes may reflect adjustments in asset classifications or updates in management’s assumptions regarding the longevity of the property, plant, and equipment.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of assets exhibits a general downward movement, starting at 9 years in 2017, then declining to as low as 4 years by 2021, with minor fluctuations in between. This reduction aligns with the decreasing average age ratio, reinforcing the interpretation of newer assets entering the asset base or accelerated asset replacements.
- Estimated Remaining Life
- The estimated remaining life demonstrates some variability but remains relatively stable, fluctuating between 3 to 5 years over the period. It was lowest at 3 years in 2018, increased to 5 years in 2019 and 2020, and then returned to 4 years in 2021. This pattern suggests ongoing reassessments of asset longevity but overall maintains a moderate remaining useful life.
Average Age
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Accumulated depreciation | ||||||
| Property and equipment, at cost | ||||||
| Asset Age Ratio | ||||||
| Average age1 | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Average age = 100 × Accumulated depreciation ÷ Property and equipment, at cost
= 100 × ÷ =
The financial data on property, plant, and equipment over the period from 2017 to 2021 displays several notable trends.
- Property and Equipment, at Cost
- The cost basis of property and equipment shows a consistent upward trend throughout the observed years. Starting at US$1,901 million in 2017, it increased each year, reaching US$2,665 million by the end of 2021. This progressive increase suggests ongoing investments or acquisitions in property and equipment assets.
- Accumulated Depreciation
- The accumulated depreciation figures reveal a different pattern. There was a decline from US$1,304 million in 2017 to US$1,148 million in 2019, followed by an increase to US$1,363 million in 2020, and a slight decrease again to US$1,329 million in 2021. This fluctuation could indicate changes in depreciation policies, asset disposals, or adjustments in useful life estimates during the period.
- Average Age Ratio
- The average age ratio, expressed as a percentage, has steadily decreased from 68.6% in 2017 to 49.87% in 2021. This decline suggests that the property and equipment assets have been, on average, getting newer over time, possibly reflecting the impact of recent additions to the asset base or asset retirements reducing the relative weight of older assets.
Overall, the data indicates sustained investment in property and equipment, accompanied by management of asset ages through acquisition and possible disposals or write-offs, while accumulated depreciation trends exhibit some volatility that may warrant further investigation for underlying causes.
Estimated Total Useful Life
Based on: 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), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Estimated total useful life = Property and equipment, at cost ÷ Depreciation expense for property and equipment
= ÷ =
The analysis of the property, plant, and equipment data over the five-year period highlights several trends and changes in the company's asset base and associated depreciation.
- Property and Equipment, at Cost
- The recorded cost of property and equipment shows a consistent upward trend from 2017 through 2021. Beginning at US$1,901 million in 2017, the value increased steadily each year to reach US$2,665 million by the end of 2021. This represents a cumulative increase of approximately 40% over the period, indicating continued investment in fixed assets.
- Depreciation Expense for Property and Equipment
- Depreciation expense exhibited notable fluctuations during the period. Starting at US$150 million in 2017, it increased significantly to US$229 million in 2018. Subsequently, depreciation expense declined slightly to US$207 million in 2019 before rising again to US$267 million in 2020 and reaching its highest value of US$311 million in 2021. This progression suggests changes in asset base composition or useful life assumptions that impact the annual depreciation charges.
- Estimated Total Useful Life
- The estimated useful life of property and equipment shows some variation and generally declined over the timeline. It dropped from 13 years in 2017 to 9 years in 2018, briefly increased to 10 years for 2019 and 2020, and then decreased again to 9 years in 2021. The shorter useful life estimates in the later years could be a factor contributing to the increased depreciation expenses observed during those periods.
Overall, the data indicates that the company is actively investing in property and equipment, resulting in a growing asset base. Concurrently, the variations in depreciation expenses and useful life estimates reflect adjustments in asset management or accounting policies that influence the company's reported depreciation charges annually.
Estimated Age, Time Elapsed since Purchase
Based on: 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), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense for property and equipment
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation values show a fluctuating trend over the five-year period. Starting at 1,304 million US dollars in 2017, it decreased to 1,193 million in 2018 and further to 1,148 million in 2019. However, there was an increase in 2020 to 1,363 million, followed by a slight decline to 1,329 million in 2021. This variability suggests adjustments or changes in asset depreciation schedules or disposals that impacted the net book value of property and equipment.
- Depreciation Expense
- Depreciation expense for property and equipment rose significantly from 150 million US dollars in 2017 to 229 million in 2018. It then dipped slightly to 207 million in 2019 before increasing again to 267 million in 2020 and reaching the highest point of 311 million in 2021. This upward trend in annual depreciation expenses indicates an increasing charge against income, possibly due to additions of new assets or accelerated depreciation methods.
- Time Elapsed Since Purchase
- The reported time elapsed since purchase represents the average age of the assets and exhibits a general decline from 9 years in 2017 to 4 years in 2021. This decreasing trend implies that the company has been investing in newer property and equipment, which may explain the rising depreciation expenses despite the fluctuations in accumulated depreciation.
- Overall Insights
- The data suggest an active asset base management, with a trend toward acquiring newer assets as reflected by the decreasing average asset age. Although accumulated depreciation shows some variability, the steady increase in annual depreciation expense aligns with a strategy of asset renewal or expansion. The fluctuations in accumulated depreciation might indicate disposals or revaluations but do not negate the overall pattern of modernization of the property and equipment.
Estimated Remaining Life
Based on: 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), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Estimated remaining life = Property and equipment, net ÷ Depreciation expense for property and equipment
= ÷ =
- Property and Equipment, Net
- The net value of property and equipment exhibited a consistent upward trend over the five-year period analyzed. Beginning at US$597 million at the end of 2017, the value increased steadily each year, reaching US$1,336 million by the end of 2021. This represents more than a doubling of the net property and equipment value within that timeframe, indicating ongoing investments and capital expenditure in fixed assets.
- Depreciation Expense for Property and Equipment
- Depreciation expense showed variability but generally increased over the years studied. Starting at US$150 million in 2017, the expense rose significantly to US$229 million in 2018, then slightly decreased to US$207 million in 2019. Following that, depreciation increased again to US$267 million in 2020 and further to US$311 million in 2021. The overall upward movement suggests an expanding depreciable asset base, consistent with the growth observed in net property and equipment.
- Estimated Remaining Life
- The estimated remaining life of property and equipment, expressed in years, fluctuated during the period. It started at 4 years in 2017, declined to 3 years in 2018, then increased to 5 years in both 2019 and 2020, before decreasing again to 4 years in 2021. These changes may reflect variations in asset compositions or updated assessments of asset longevity, impacting the calculation of depreciation expense.