Analysis of Property, Plant and Equipment
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Caterpillar Inc. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Selected Financial Data since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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Property, Plant and Equipment Disclosure
Caterpillar Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Land
- The value of land has shown a consistent decrease over the five-year period, declining from 681 million US dollars in 2020 to 612 million US dollars in 2024. This gradual reduction suggests a strategic divestment or revaluation of land assets.
- Buildings and Land Improvements
- The amount invested in buildings and land improvements has remained relatively stable, with a slight increase from 7,091 million US dollars in 2020 to 7,281 million US dollars in 2024. This indicates moderate investment or maintenance in physical infrastructure over time.
- Machinery, Equipment, and Other
- This category displays a downward trend from 13,004 million US dollars in 2020 to 12,523 million US dollars in 2024, albeit with some fluctuations. The overall decline may reflect asset disposals, depreciation, or lower capital expenditures in machinery and equipment.
- Software
- Investments in software have remained fairly stable, with minor fluctuations, moving from 1,679 million US dollars in 2020 to 1,609 million US dollars in 2024. This stability suggests a consistent allocation toward technological assets.
- Equipment Leased to Others
- The value of equipment leased to others decreased from 6,077 million US dollars in 2020 to 5,701 million US dollars in 2024, showing some variability in between. This decline could indicate a shrinking leasing portfolio or asset disposals in this segment.
- Construction-in-Process
- Construction-in-process shows a clear upward trend, increasing from 739 million US dollars in 2020 to 1,751 million US dollars in 2024. This rising investment suggests ongoing or planned expansions in capital projects and asset development.
- Property, Plant, and Equipment at Cost
- The total property, plant, and equipment recorded at cost initially decreased from 29,271 million US dollars in 2020 to 28,064 million US dollars in 2022, followed by a recovery to 29,477 million US dollars in 2024. This pattern indicates a phase of asset reduction followed by renewed capital investment.
- Accumulated Depreciation
- Accumulated depreciation has generally decreased in magnitude from -16,870 million US dollars in 2020 to -16,116 million US dollars in 2024, marking a slight reduction in absolute accumulated depreciation. This may reflect retirements or disposals of older assets or changes in depreciation methods.
- Property, Plant, and Equipment, Net
- The net property, plant, and equipment value declined from 12,401 million US dollars in 2020 to 12,028 million US dollars in 2022, then increased to 13,361 million US dollars by 2024. This trend mirrors the cost values and implies asset base strengthening in the latter years following earlier reductions.
Asset Age Ratios (Summary)
Caterpillar Inc., asset age ratios
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Average age ratio
- The average age ratio of the property, plant, and equipment shows a gradual decline over the five-year period, decreasing from 59.01% in 2020 to 55.83% in 2024. This indicates that on average, assets are becoming relatively younger with respect to their total useful life. The consistent downward trend suggests ongoing asset renewal or replacement activities.
- Estimated total useful life
- The estimated total useful life of assets has increased from 13 years in 2020 to 15 years in 2024. This rise indicates a revision in the asset lifespan assumptions, possibly reflecting improvements in asset quality, maintenance practices, or changes in accounting estimates concerning asset durability.
- Estimated age, time elapsed since purchase
- The estimated age of the assets has remained constant at 8 years throughout the five-year period. This stability suggests a steady asset acquisition schedule without significant acceleration or deceleration in purchasing.
- Estimated remaining life
- The estimated remaining life of the assets has also remained unchanged at 6 years across the reported years. Maintaining a constant remaining life, combined with an increase in total useful life, aligns with the observed decrease in average age ratio, highlighting extended asset longevity expectations.
Average Age
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, at cost – Land)
= 100 × ÷ ( – ) =
- Accumulated Depreciation
- The accumulated depreciation decreased from 16,870 million USD in 2020 to 16,036 million USD in 2022, representing a downward trend over the first three years. Subsequently, it stabilized with slight fluctuations, recording values of 15,943 million USD in 2023 and a minor increase to 16,116 million USD in 2024. This overall pattern indicates a reduction in accumulated depreciation over the initial period followed by relative stability.
- Property, Plant and Equipment, at Cost
- The cost of property, plant and equipment declined progressively from 29,271 million USD in 2020 to 28,064 million USD in 2022. After this period of contraction, the figure reversed to an upward trend, increasing to 28,623 million USD in 2023 and further to 29,477 million USD in 2024. This suggests a renewal or expansion of asset investments after two years of reduction.
- Land
- The value of land assets exhibited a gradual decrease throughout the timeframe, dropping from 681 million USD in 2020 to 612 million USD in 2024. This consistent decline, albeit modest, may reflect disposals, revaluations, or other adjustments affecting land holdings.
- Average Age Ratio
- The average age ratio of the property, plant, and equipment showed a continuous decrease from 59.01% in 2020 to 55.83% in 2024. This downward trend implies a rejuvenation of the asset base, indicating that newer assets are being acquired or existing assets are depreciating at a rate that lowers the overall average age.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Estimated total useful life = (Property, plant and equipment, at cost – Land) ÷ Consolidated depreciation expense
= ( – ) ÷ =
- Property, Plant and Equipment, at Cost
- The value of property, plant, and equipment at cost exhibited a declining trend from 2020 to 2022, decreasing from 29,271 million US dollars to 28,064 million US dollars. This was followed by a recovery period, with values rising to 28,623 million US dollars in 2023 and further increasing to 29,477 million US dollars in 2024. The data suggests an initial contraction in capital assets investment or possible disposals, succeeded by renewed investments or acquisitions in the latter years.
- Land
- The land asset value showed a consistent, gradual decreasing pattern across the five years. It declined steadily from 681 million US dollars in 2020 to 612 million US dollars in 2024. This could imply minor disposals or revaluations of land holdings over time without significant new acquisitions.
- Consolidated Depreciation Expense
- The depreciation expense demonstrated a decreasing trend from 2,122 million US dollars in 2020 to a low of 1,929 million US dollars in 2023, followed by a slight increase to 1,983 million US dollars in 2024. This decline over the first four years could be associated with aging or disposal of older assets, resulting in lower depreciation charges. The slight rise in 2024 might indicate increased depreciation from newly acquired or upgraded assets.
- Estimated Total Useful Life
- The estimated total useful life of property, plant, and equipment increased from 13 years in 2020 to 14 years in 2021 and remained steady through 2022. It further extended to 15 years in 2023 and maintained this level in 2024. This increase in useful life suggests improved asset longevity, possibly due to better maintenance, changes in asset composition, or updated company policies on asset depreciation.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Consolidated depreciation expense
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation shows a slight overall decline from US$16,870 million in 2020 to US$16,116 million in 2024. There is a noticeable decrease from 2020 to 2023, with a minor uptick in 2024. This suggests some reduction in the carrying value of the assets or possible adjustments affecting accumulated depreciation, although the general trend from 2020 to 2023 is downward.
- Consolidated Depreciation Expense
- The depreciation expense has a consistent decreasing trend from US$2,122 million in 2020 down to US$1,929 million in 2023, followed by a slight increase to US$1,983 million in 2024. The reduction in depreciation expense over most of the period may reflect decreasing depreciation charges on existing assets, possibly due to asset aging or changes in asset composition. The increase in 2024 indicates a possible addition of newer assets or changes in depreciation policies.
- Time Elapsed Since Purchase
- The time elapsed since purchase remains constant at 8 years throughout the five years under review. This stability indicates no significant changes in the average age of the assets related to the property, plant, and equipment, suggesting consistent asset replacement or acquisition patterns.
Estimated Remaining Life
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Consolidated depreciation expense
= ( – ) ÷ =
- Property, plant, and equipment, net
- The net value of property, plant, and equipment exhibited a generally increasing trend over the observed period. Beginning at 12,401 million US dollars at the end of 2020, there was a slight decline in 2021 and 2022, reaching 12,028 million US dollars. However, the value rebounded strongly in 2023 to 12,680 million US dollars and further increased to 13,361 million US dollars by the end of 2024. This indicates ongoing investment or asset retention leading to an overall asset base expansion after a brief decline.
- Land
- The value of land showed a consistent downward trend throughout the period under review. Starting from 681 million US dollars in 2020, it decreased incrementally each year to 612 million US dollars by the end of 2024. This steady reduction may reflect asset disposals, revaluation adjustments, or other factors impacting land holdings.
- Consolidated depreciation expense
- Depreciation expense decreased from 2,122 million US dollars in 2020 to a low of 1,929 million US dollars in 2023, before slightly increasing to 1,983 million US dollars in 2024. The downward trend suggests either aging assets with reduced depreciable cost or effective asset management leading to lower annual depreciation charges. The modest uptick in 2024 might be related to new asset acquisitions or changes in depreciation policies.
- Estimated remaining life
- The estimated remaining useful life of the assets remained constant at 6 years throughout the entire period. This consistency indicates no significant changes in asset lifespan assumptions or replacement cycles during these years.