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Analysis of Property, Plant and Equipment
Difficulty: Advanced
Property, Plant and Equipment Disclosure
Eli Lilly & Co., Statement of Financial Position, Property, Plant and Equipment
USD $ in thousands
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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Source: Based on data from Eli Lilly & Co. Annual Reports
| Item | Description | The company |
|---|---|---|
| Land | Carrying amount as of the balance sheet date of real estate held for productive use. This excludes land held for sale. | Eli Lilly & Co.'s land declined from 2015 to 2016 and from 2016 to 2017. |
| Buildings | Carrying amount as of the balance sheet date of long-lived, depreciable assets that include building structures held for productive use including any addition, improvement, or renovation to the structure, such as interior masonry, interior flooring, electrical, and plumbing. | Eli Lilly & Co.'s buildings increased from 2015 to 2016 and from 2016 to 2017. |
| Equipment | Carrying amount as of the balance sheet date of long-lived, depreciable asset used in production process to produce goods and services. | Eli Lilly & Co.'s equipment declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level. |
| Construction in progress | Carrying amount at the balance sheet date of long-lived asset under construction that include construction costs to date on capital projects that have not been completed and assets being constructed that are not ready to be placed into service. | Eli Lilly & Co.'s construction in progress increased from 2015 to 2016 but then slightly declined from 2016 to 2017. |
| Property and equipment, gross | Carrying amount at the balance sheet date for long-lived physical assets used in the normal conduct of business and not intended for resale. This can include land, physical structures, machinery, vehicles, furniture, computer equipment, construction in progress, and similar items. Amount does not include depreciation. | Eli Lilly & Co.'s property and equipment, gross increased from 2015 to 2016 and from 2016 to 2017. |
| Property and equipment, net | Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, and production equipment. | Eli Lilly & Co.'s property and equipment, net increased from 2015 to 2016 and from 2016 to 2017. |
Property, Plant and Equipment Ratios (Summary)
Eli Lilly & Co., Property, Plant and Equipment Ratios
| 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. | Eli Lilly & Co.'s average age of depreciable property, plant and equipment improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017. |
| 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. | Eli Lilly & Co.'s estimated total useful life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017. |
| Estimated time elapsed since purchase | The approximate age in years of a company's fixed assets. Useful for comparison purposes. | Eli Lilly & Co.'s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
| Estimated remaining life | Eli Lilly & Co.'s estimated remaining life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017. |
Average Age
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| Selected Financial Data (USD $ in thousands) | ||||||
| Accumulated depreciation | |
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| Property and equipment, gross | |
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| Average age1 | % |
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2017 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property and equipment, gross – Land)
= 100 × ÷ ( – ) = %
| 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. | Eli Lilly & Co.'s average age of depreciable property, plant and equipment improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017. |
Estimated Total Useful Life
2017 Calculations
1 Estimated total useful life (years) = (Property and equipment, gross – Land) ÷ Depreciation expense
= ( – ) ÷ =
| 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. | Eli Lilly & Co.'s estimated total useful life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017. |
Estimated Age, Time Elapsed Since Purchase
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
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| Accumulated depreciation | |
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| Depreciation expense | |
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| Time elapsed since purchase (years)1 | |
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2017 Calculations
1 Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation expense
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Estimated time elapsed since purchase | The approximate age in years of a company's fixed assets. Useful for comparison purposes. | Eli Lilly & Co.'s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017. |
Estimated Remaining Life
2017 Calculations
1 Estimated remaining life (years) = (Property and equipment, net – Land) ÷ Depreciation expense
= ( – ) ÷ =
| Ratio | Description | The company |
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| Estimated remaining life | Eli Lilly & Co.'s estimated remaining life of depreciable property, plant and equipment increased from 2015 to 2016 and from 2016 to 2017. |
