Analysis of Property, Plant and Equipment
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Analysis of Debt
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Property, Plant and Equipment Disclosure
Western Digital Corp., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
- Land
- The value of land shows a gradual decline from $306 million in 2018 to $269 million in 2022, where it stabilizes through 2023. This trend suggests a decrease in land holdings or revaluation over the period.
- Buildings and improvements
- There is a downward trend from $1,949 million in 2018 to $1,743 million in 2019, followed by a steady recovery reaching $1,955 million in 2023. This indicates initial disposals or impairment, with subsequent reinvestments or additions in this asset category.
- Machinery and equipment
- Values remain relatively stable in the initial years, increasing slightly from $7,209 million in 2018 to $7,391 million in 2020, before experiencing a consistent upward trajectory that peaks at $8,704 million in 2023. This rise reflects ongoing capital expenditure and asset base expansion.
- Computer equipment and software
- Relatively stable values with minor fluctuations; starting at $440 million in 2018, dipping slightly in 2020 to $429 million, followed by an increase to $494 million in 2022, then a slight decrease to $470 million in 2023. This pattern suggests moderate investment and occasional disposals or amortizations.
- Furniture and fixtures
- The category shows modest variation from $48 million in 2018, rising to $56 million in 2019, and then maintaining a level around $54 million through 2023, indicating stable asset levels with minor asset turnover.
- Construction-in-process
- There is a notable upward trend, increasing from $234 million in 2018 to $798 million in 2023. This substantial increase indicates significant ongoing investment projects and asset development in progress.
- Property, plant and equipment, gross
- The aggregate gross PPE values show an initial dip from $10,186 million in 2018 to $10,003 million in 2019, followed by a steady increase up to $12,250 million in 2023. This reflects overall asset growth, driven largely by machinery, equipment, and construction-in-process increases.
- Accumulated depreciation
- Accumulated depreciation increases consistently throughout the period, from negative $7,091 million in 2018 to negative $8,630 million in 2023. This steady rise aligns with the aging PPE base and ongoing usage of assets.
- Property, plant and equipment, net
- The net PPE shows a decline from $3,095 million in 2018 to $2,843 million in 2019, remaining relatively flat until 2020, then increasing to a peak of $3,670 million in 2022 before a slight decrease to $3,620 million in 2023. This suggests that despite accumulated depreciation, new investments and capital expenditures have enhanced the net asset base over time, with a minor recent contraction.
Asset Age Ratios (Summary)
Western Digital Corp., asset age ratios
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
- Average Age Ratio
- The average age ratio shows a generally stable pattern over the observed periods, fluctuating slightly around the low 70% range. It started at 71.77% in 2018, peaked at 74.42% in 2020, then decreased slightly to 70.93% by 2022 before rising again to 72.03% in 2023. This indicates that the proportion of the asset's life already utilized remains fairly consistent, suggesting a relatively steady utilization or replacement cycle for the assets.
- Estimated Total Useful Life
- A clear upward trend is visible in the estimated total useful life of the assets. It increased from 11 years in 2018 to 17 years in 2022 and remained constant at 17 years through 2023. This trend suggests improvements in asset longevity, possibly due to technological advancements, improved maintenance, or changes in asset composition.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of the assets has increased progressively, moving from 8 years in 2018 and 2019 to 12 years by 2022 and 2023. The steady increase aligns with the passage of time but at a rate that appears to be slightly slower than the increase in total useful life, which could reflect acquisitions of newer assets or early retirements balancing the aging assets.
- Estimated Remaining Life
- Estimated remaining life increased from 3 years in the initial years up to 5 years by 2022 and remained at that level through 2023. This indicates that while the assets are aging, improvements in estimated total useful life have resulted in a higher residual lifespan, implying prolonged usability and value retention of the company's property, plant, and equipment.
Average Age
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
2023 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, gross – Land)
= 100 × ÷ ( – ) =
- Accumulated Depreciation
- The accumulated depreciation shows a consistent upward trend over the six-year period, increasing from $7,091 million in 2018 to $8,630 million in 2023. This indicates ongoing wear and usage of the company's property, plant, and equipment assets over time.
- Property, Plant and Equipment, Gross
- The gross value of property, plant, and equipment experienced fluctuations initially, decreasing slightly from $10,186 million in 2018 to $10,003 million in 2019, before rebounding to $10,300 million in 2020. From 2020 onwards, there was a steady increase, rising to $12,250 million by mid-2023, suggesting ongoing investments and acquisitions of fixed assets.
- Land
- The value of land decreased gradually from $306 million in 2018 to $269 million in 2022 and remained stable in 2023. This decline might reflect asset disposals or revaluation adjustments related to land holdings.
- Average Age Ratio
- The average age ratio, representing the proportion of accumulated depreciation relative to gross property, plant, and equipment, exhibited modest fluctuations. It rose from 71.77% in 2018 to a peak of 74.42% in 2020, before decreasing slightly to 72.03% in 2023. This pattern suggests aging assets with some reinvestment or replacement activity moderating the ratio in later years.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
2023 Calculations
1 Estimated total useful life = (Property, plant and equipment, gross – Land) ÷ Depreciation expense for property, plant and equipment
= ( – ) ÷ =
- Property, plant and equipment, gross
- The gross value of property, plant, and equipment shows a general upward trend over the six-year period. Starting at approximately 10,186 million USD in 2018, it decreased slightly to 10,003 million USD in 2019, followed by a recovery and continued growth reaching 12,250 million USD by mid-2023. This indicates ongoing investments or acquisitions in the company's fixed assets.
- Land
- The land value has demonstrated a gradual decline from 306 million USD in 2018 to 269 million USD as of 2022 and 2023. The consistent value in the last two years suggests stabilization after a period of reduction, which could imply disposals or revaluations during earlier years.
- Depreciation expense for property, plant and equipment
- The depreciation expense has decreased steadily from 871 million USD in 2018 to 695 million USD in 2023. This declining trend might reflect changes in asset composition, perhaps with more fully depreciated assets, or adjustments in depreciation policies. The reduction also aligns with an increase in estimated total useful life.
- Estimated total useful life
- The estimated total useful life of property, plant, and equipment has progressively increased from 11 years in 2018 to 17 years by 2022 and remained constant in 2023. This extension suggests a reassessment of asset longevity, potentially reflecting improved asset quality, maintenance, or changing depreciation assumptions.
- Overall Insights
- The data presents a scenario where the company is investing in its property, plant, and equipment base, reversing a minor dip observed in 2019. Concurrently, there is a reduction in depreciation expense which, combined with a lengthening of asset useful life, may signify enhanced asset management or a shift in accounting estimates. The declining land value contrasts with the broader growth in gross assets, indicating selective changes within asset categories.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
2023 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense for property, plant and equipment
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation consistently increased over the six-year period, rising from $7,091 million in 2018 to $8,630 million in 2023. This indicates a continual recognition of wear and tear or obsolescence on the property, plant, and equipment assets. The trend reflects a steady increase year-over-year, suggesting ongoing usage and aging of the fixed assets.
- Depreciation Expense for Property, Plant, and Equipment
- The annual depreciation expense demonstrated a declining trend throughout the period under review. Beginning at $871 million in 2018, it gradually decreased to $695 million by 2023. This decline may reflect either a reduced rate of asset acquisition, changes in depreciation methods or estimates, or potentially a shift towards assets with longer useful lives.
- Time Elapsed Since Purchase
- The average time elapsed since purchase of the property, plant, and equipment showed a moderate increase, moving from 8 years in 2018 and 2019, up to 12 years by 2022 and 2023. This upward trend indicates aging asset base, which aligns with the growth in accumulated depreciation and the decrease in depreciation expense, possibly due to assets approaching the end of their depreciable lives or fewer new asset additions.
Estimated Remaining Life
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
2023 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Depreciation expense for property, plant and equipment
= ( – ) ÷ =
- Property, Plant, and Equipment, Net
- The net value of property, plant, and equipment experienced a decline from 2018 to 2019, decreasing from 3,095 million USD to 2,843 million USD. This value remained relatively stable in 2020 at 2,854 million USD. From 2020 onward, an upward trend is observed, with a notable increase in 2021 to 3,188 million USD, followed by continued growth in 2022 reaching 3,670 million USD, before a slight decrease to 3,620 million USD in 2023. Overall, the net value shows resilience and recovery after an initial dip.
- Land
- The land asset value displayed a gradual decrease over the period covered. Beginning at 306 million USD in 2018, it slightly declined to 294 million USD in 2019 and remained stable in 2020. Subsequently, it decreased further to 278 million USD in 2021, followed by continued minor reductions to 269 million USD in both 2022 and 2023. The steady decline suggests either disposals or revaluation of land assets over the years.
- Depreciation Expense for Property, Plant, and Equipment
- The depreciation expense demonstrated a consistent downward trend from 2018 through 2023. Starting at 871 million USD in 2018, the expense decreased progressively each year, reaching 695 million USD in 2023. This steady decrease may reflect aging assets with longer remaining useful lives or changes in the asset composition.
- Estimated Remaining Life of Assets
- The estimated remaining life of property, plant, and equipment remained constant at 3 years from 2018 to 2020. However, from 2021 onward, it increased to 4 years and further to 5 years in 2022 and 2023. This extension in estimated useful life aligns with the reduction in depreciation expense and may indicate asset revaluation, improvements, or acquisitions of assets with longer lifespans.