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Altria Group Inc. (MO)

Analysis of Property, Plant and Equipment

Advanced level

Accounting Policy on Property, Plant and Equipment
Property, Plant and Equipment Disclosure
Asset Age Ratios (Summary)
Average Age
Estimated Total Useful Life
Estimated Age, Time Elapsed Since Purchase
Estimated Remaining Life

Accounting Policy on Property, Plant and Equipment

Property, plant and equipment are stated at historical costs and depreciated by the straight-line method over the estimated useful lives of the assets. Machinery and equipment are depreciated over periods up to 25 years, and buildings and building improvements over periods up to 50 years.

Source: 10-K (filing date: 2019-02-26).

Property, Plant and Equipment Disclosure

Altria Group Inc., balance sheet: property, plant and equipment

US$ in millions

		Dec 31, 2018		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015		Dec 31, 2014
	Land and land improvements
	Buildings and building equipment
	Machinery and equipment
	Construction in progress
	Property, plant and equipment, at cost
	Accumulated depreciation
	Property, plant and equipment, net

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25).

Item	Description	The company
Property, plant and equipment, at cost	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.	Altria Group Inc.’s property, plant and equipment, at cost increased from 2016 to 2017 and from 2017 to 2018.
Property, plant 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.	Altria Group Inc.’s property, plant and equipment, net decreased from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

Asset Age Ratios (Summary)

Altria Group Inc., asset age ratios

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Average age ratio
	Estimated total useful life (years)
	Estimated age, time elapsed since purchase (years)
	Estimated remaining life (years)

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25).

Asset age ratio	Description	The company
Average age ratio	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.	Altria Group Inc.’s average age ratio 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.	Altria Group Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.
Estimated time elapsed since purchase	The approximate age in years of a company’s fixed assets. Useful for comparison purposes.	Altria Group Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.
Estimated remaining life		Altria Group Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2016 to 2017 but then slightly increased from 2017 to 2018.

Average Age

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (US$ in millions)
	Accumulated depreciation
	Property, plant and equipment, at cost
	Land and land improvements
	Asset Age Ratio
	Average age¹

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25).

2018 Calculations

¹ Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, at cost – Land and land improvements)
= 100 × hidden ÷ ( hidden – hidden ) = hidden

Asset age 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.	Altria Group Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.

Estimated Total Useful Life

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (US$ in millions)
	Property, plant and equipment, at cost
	Land and land improvements
	Depreciation expense
	Asset Age Ratio (Years)
	Estimated total useful life¹

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25).

2018 Calculations

¹ Estimated total useful life = (Property, plant and equipment, at cost – Land and land improvements) ÷ Depreciation expense
= ( hidden – hidden ) ÷ hidden = hidden

Asset age 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.	Altria Group Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

Estimated Age, Time Elapsed since Purchase

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (US$ in millions)
	Accumulated depreciation
	Depreciation expense
	Asset Age Ratio (Years)
	Time elapsed since purchase¹

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25).

2018 Calculations

¹ Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= hidden ÷ hidden = hidden

Asset age ratio	Description	The company
Estimated time elapsed since purchase	The approximate age in years of a company’s fixed assets. Useful for comparison purposes.	Altria Group Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2016 to 2017 and from 2017 to 2018.

Estimated Remaining Life

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (US$ in millions)
	Property, plant and equipment, net
	Land and land improvements
	Depreciation expense
	Asset Age Ratio (Years)
	Estimated remaining life¹

Based on: 10-K (filing date: 2019-02-26), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-27), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-25).

2018 Calculations

¹ Estimated remaining life = (Property, plant and equipment, net – Land and land improvements) ÷ Depreciation expense
= ( hidden – hidden ) ÷ hidden = hidden

Asset age ratio	Description	The company
Estimated remaining life		Altria Group Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2016 to 2017 but then slightly increased from 2017 to 2018.

	Altria Group Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality