Analysis of Property, Plant and Equipment
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Eaton Corp. plc pages available for free this week:
- Balance Sheet: Assets
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Reportable Segments
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Aggregate Accruals
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Property, Plant and Equipment Disclosure
Eaton Corp. plc, 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 and Buildings
- The value of land and buildings exhibited relative stability over the analyzed period. Starting at US$2,184 million in 2020, it experienced minor fluctuations, peaking at US$2,241 million in 2023 before slightly declining to US$2,239 million by 2024. This reflects a generally steady investment or valuation in this asset category without significant expansion or reduction.
- Machinery and Equipment
- This category showed a consistent upward trend throughout the five-year period, increasing from US$5,404 million in 2020 to US$6,823 million in 2024. The growth was particularly notable in the last two years, suggesting increased capital expenditure or asset acquisition in machinery and equipment contributing to enhanced production capacity or operational capability.
- Gross Property, Plant and Equipment
- Reflecting combined movements of land, buildings, and machinery and equipment, the gross property, plant, and equipment balance increased steadily from US$7,588 million in 2020 to US$9,062 million in 2024. This upward trajectory indicates ongoing investment in fixed assets over the period.
- Accumulated Depreciation
- Accumulated depreciation increased in absolute terms from -US$4,624 million in 2020 to -US$5,333 million in 2024, demonstrating the expected depreciation expense associated with aging property, plant and equipment. The rising accumulated depreciation corresponds with asset acquisitions and the passage of time, which naturally wear assets down.
- Net Property, Plant and Equipment
- Net property, plant, and equipment, representing the book value after depreciation, showed an upward trend from US$2,964 million in 2020 to US$3,729 million in 2024. The most significant increases occurred after 2022, indicating that new asset additions outpaced depreciation expenses, leading to growth in net fixed assets.
- Summary
- Overall, the data reveals ongoing investment and asset growth in machinery and equipment, which drives the increase in gross and net property, plant and equipment values. Land and buildings remained stable, indicating no significant asset revaluation or disposals in this category. The increase in accumulated depreciation aligns with asset aging and usage, but net asset values suggest that capital expenditures have effectively expanded the asset base over the reported period.
Asset Age Ratios (Summary)
Eaton Corp. plc, 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).
The data reflects several key metrics related to the property, plant, and equipment over a five-year period from 2020 to 2024. The trends observed provide insights into asset aging and lifecycle estimates.
- Average Age Ratio (%)
- The average age ratio shows a gradual decline over the observed period, decreasing from 60.94% at the end of 2020 to 58.85% by the end of 2024. This indicates a slow yet consistent reduction in the proportion of asset life that has been used, suggesting either acquisition of newer assets or asset retirements reducing the average age within the portfolio.
- Estimated Total Useful Life (in years)
- The estimated total useful life is relatively stable, fluctuating slightly between 18 and 20 years. After a dip to 18 years in 2021, the value rises to 20 years in 2022 and remains constant through 2024. This suggests a consistent reassessment of asset longevity, potentially reflecting maintenance practices or technology upgrades that extend asset life expectancy.
- Estimated Age, Time Elapsed Since Purchase (in years)
- The estimated age remains steady at 11 years for 2020 and 2021, increasing modestly to 12 years from 2022 onwards. This points to a relatively mature asset base with aging that matches the passage of time, indicating limited rapid turnover or replacement of assets.
- Estimated Remaining Life (in years)
- The estimated remaining life exhibits an increase from 7 years between 2020 and 2021 to 8 years from 2022 through 2024. This improvement may indicate asset life extensions achieved through maintenance, refurbishments, or accounting reassessments extending the expected usability of the equipment.
Overall, the data suggests a stable and aging asset base with slight improvements in remaining service life and a marginal decrease in the average age ratio. The consistency in total useful life estimates and the small increase in remaining life reflect effective asset management practices that sustain asset utility over time.
Average Age
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Accumulated depreciation | ||||||
| Gross property, plant and equipment | ||||||
| Asset Age Ratio | ||||||
| Average age1 | ||||||
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 ÷ Gross property, plant and equipment
= 100 × ÷ =
- Accumulated Depreciation
- There is a consistent upward trend in accumulated depreciation over the five-year period. The balance increased from US$ 4,624 million at the end of 2020 to US$ 5,333 million by the end of 2024. This gradual rise suggests ongoing wear and usage of property, plant, and equipment assets, reflecting continued asset usage and aging.
- Gross Property, Plant, and Equipment
- The gross value of property, plant, and equipment showed steady growth throughout the timeframe. It rose from US$ 7,588 million at the end of 2020 to US$ 9,062 million by the end of 2024. This increase indicates consistent investments or additions to the asset base, likely aimed at expanding or modernizing the company's operational capacity.
- Average Age Ratio
- The average age ratio of the assets demonstrated a gradual decline from 60.94% in 2020 to 58.85% in 2024. This decreasing trend indicates that, on average, the property, plant, and equipment assets are becoming relatively newer over time. This could be attributed to the rate of asset additions outpacing the aging and depreciation of existing assets, signifying a potential strategic focus on maintaining a more current asset base.
- Overall Analysis
- Over the analyzed period, the company exhibited growing investment in fixed assets, as shown by the increasing gross property, plant, and equipment balance. The steady rise in accumulated depreciation aligns with normal asset usage and aging. However, the slight decline in the average age ratio suggests effective asset management strategies that may include replacing or upgrading older assets. Collectively, these trends indicate a balance between asset renewal and sustained asset base growth.
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 = Gross property, plant and equipment ÷ Depreciation of property, plant and equipment
= ÷ =
- Gross Property, Plant, and Equipment
- The gross value of property, plant, and equipment exhibits a steady upward trend over the five-year period. It increased from US$7,588 million at the end of 2020 to approximately US$9,062 million by the end of 2024. This represents a cumulative growth of around 19.4%, indicating ongoing investment or acquisition of tangible assets.
- Depreciation of Property, Plant, and Equipment
- Depreciation expenses fluctuate slightly but generally maintain a range between US$408 million and US$446 million. The depreciation value increased modestly from US$408 million in 2020 to US$446 million in 2024. Despite a small dip in 2022 to US$408 million, the overall depreciation showed a gradual rise, reflecting possibly new asset additions and consistent utilization of fixed assets.
- Estimated Total Useful Life
- The estimated useful life of property, plant, and equipment showed minor variability. It decreased from 19 years in 2020 to 18 years in 2021 but stabilized at 20 years from 2022 onwards. This suggests a reassessment towards longer asset life in recent years, potentially reflecting changes in asset composition or updated management assumptions.
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 ÷ Depreciation of property, plant and equipment
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation of property, plant, and equipment showed a consistent upward trend over the five-year period. It increased from 4,624 million USD at the end of 2020 to 5,333 million USD by the end of 2024, reflecting a steady increase each year. Notably, the largest annual increase occurred between 2022 and 2023 with an addition of 341 million USD, indicating increased depreciation expenses or asset aging during this period.
- Depreciation Expense
- The annual depreciation expense fluctuated moderately but remained within a narrow range from 408 million to 446 million USD. Depreciation was relatively stable at 408 million USD in both 2020 and 2022, with slight increases noted in 2021, 2023, and 2024, reaching 446 million USD in the last year. This suggests consistent depreciation charges applied to property, plant, and equipment each year, with a slight upward bias potentially due to new asset additions or changes in depreciation methods.
- Time Elapsed Since Purchase
- The average time elapsed since purchase remained stable at 11 years in 2020 and 2021, increasing marginally to 12 years from 2022 onwards through 2024. This indicates that the asset base is relatively mature, with no significant acceleration in new asset acquisitions to reduce the average age of the assets during this timeframe.
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 = Net property, plant and equipment ÷ Depreciation of property, plant and equipment
= ÷ =
- Net Property, Plant and Equipment
- The net value of property, plant, and equipment showed a steady increase over the five-year period. Starting at 2,964 million US dollars at the end of 2020, it rose consistently each year, reaching 3,729 million US dollars by the end of 2024. This represents an overall growth of approximately 25.9%, indicating ongoing investment or appreciation in these assets.
- Depreciation of Property, Plant and Equipment
- Depreciation expenses fluctuated moderately throughout the reviewed years. The amount increased from 408 million US dollars in 2020 to 426 million in 2021, then slightly decreased back to 408 million in 2022. Subsequently, it resumed an upward trajectory, reaching 429 million in 2023 and 446 million in 2024. This pattern suggests adjustments in depreciation calculations or changes in asset composition affecting annual charges.
- Estimated Remaining Life
- The estimated remaining useful life of property, plant, and equipment was stable at 7 years during 2020 and 2021, then increased to 8 years from 2022 onward. This rise may reflect revisions in asset lifespan assumptions or acquisitions of assets with longer expected useful lives, contributing to capital asset management strategies.