Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Caterpillar Inc. (NYSE:CAT)

Analysis of Property, Plant and Equipment

Advanced level

Property, Plant and Equipment Disclosure

Caterpillar Inc., balance sheet: property, plant and equipment

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Land 664  671  664  667  644 
Buildings and land improvements 6,710  6,977  7,515  7,383  7,242 
Machinery, equipment and other 13,287  13,733  14,888  15,392  15,686 
Software 1,728  1,703  1,745  1,641  1,636 
Equipment leased to others 6,208  6,015  6,038  6,086  5,728 
Construction-in-process 620  682  688  771  1,041 
Property, plant and equipment, at cost 29,217  29,781  31,538  31,940  31,977 
Accumulated depreciation (16,313) (16,207) (17,383) (16,618) (15,887)
Property, plant and equipment, net 12,904  13,574  14,155  15,322  16,090 

Based on: 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16).

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. Caterpillar Inc.’s property, plant and equipment, at cost decreased from 2017 to 2018 and from 2018 to 2019.
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. Caterpillar Inc.’s property, plant and equipment, net decreased from 2017 to 2018 and from 2018 to 2019.

Asset Age Ratios (Summary)

Caterpillar Inc., asset age ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Average age ratio 57.13% 55.68% 56.30% 53.14% 50.70%
Estimated total useful life (years) 13 12 12 12 12
Estimated age, time elapsed since purchase (years) 7 7 7 6 6
Estimated remaining life (years) 5 5 5 5 6

Based on: 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16).

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. Caterpillar Inc.’s average age ratio of depreciable property, plant and equipment improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
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. Caterpillar Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Caterpillar Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Estimated remaining life Caterpillar Inc.’s estimated remaining life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.

Average Age

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Accumulated depreciation 16,313  16,207  17,383  16,618  15,887 
Property, plant and equipment, at cost 29,217  29,781  31,538  31,940  31,977 
Land 664  671  664  667  644 
Asset Age Ratio
Average age1 57.13% 55.68% 56.30% 53.14% 50.70%

Based on: 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16).

2019 Calculations

1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, at cost – Land)
= 100 × 16,313 ÷ (29,217 – 664) = 57.13%

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. Caterpillar Inc.’s average age ratio of depreciable property, plant and equipment improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Estimated Total Useful Life

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Property, plant and equipment, at cost 29,217  29,781  31,538  31,940  31,977 
Land 664  671  664  667  644 
Consolidated depreciation expense 2,253  2,435  2,555  2,707  2,705 
Asset Age Ratio (Years)
Estimated total useful life1 13 12 12 12 12

Based on: 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16).

2019 Calculations

1 Estimated total useful life = (Property, plant and equipment, at cost – Land) ÷ Consolidated depreciation expense
= (29,217 – 664) ÷ 2,253 = 13

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. Caterpillar Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Estimated Age, Time Elapsed since Purchase

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Accumulated depreciation 16,313  16,207  17,383  16,618  15,887 
Consolidated depreciation expense 2,253  2,435  2,555  2,707  2,705 
Asset Age Ratio (Years)
Time elapsed since purchase1 7 7 7 6 6

Based on: 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16).

2019 Calculations

1 Time elapsed since purchase = Accumulated depreciation ÷ Consolidated depreciation expense
= 16,313 ÷ 2,253 = 7

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. Caterpillar Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Estimated Remaining Life

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Property, plant and equipment, net 12,904  13,574  14,155  15,322  16,090 
Land 664  671  664  667  644 
Consolidated depreciation expense 2,253  2,435  2,555  2,707  2,705 
Asset Age Ratio (Years)
Estimated remaining life1 5 5 5 5 6

Based on: 10-K (filing date: 2020-02-19), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16).

2019 Calculations

1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Consolidated depreciation expense
= (12,904 – 664) ÷ 2,253 = 5

Asset age ratio Description The company
Estimated remaining life Caterpillar Inc.’s estimated remaining life of depreciable property, plant and equipment increased from 2017 to 2018 and from 2018 to 2019.