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Analysis of Property, Plant and Equipment
Advanced level
Property, Plant and Equipment Disclosure
Lowe’s Cos. Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).
| Item | Description | The company |
|---|---|---|
| Property, 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. | Lowe’s Cos. Inc.’s property, cost decreased from 2018 to 2019 but then slightly increased from 2019 to 2020. |
| Property, less accumulated depreciation | 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. | Lowe’s Cos. Inc.’s property, less accumulated depreciation decreased from 2018 to 2019 but then slightly increased from 2019 to 2020. |
Asset Age Ratios (Summary)
Lowe’s Cos. Inc., asset age ratios
Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).
| 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. | Lowe’s Cos. Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020. |
| 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. | Lowe’s Cos. Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2018 to 2019 but then slightly increased from 2019 to 2020. |
| Estimated time elapsed since purchase | The approximate age in years of a company’s fixed assets. Useful for comparison purposes. | Lowe’s Cos. Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level. |
| Estimated remaining life | Lowe’s Cos. Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2018 to 2019 but then slightly increased from 2019 to 2020. |
Average Age
| Jan 31, 2020 | Feb 1, 2019 | Feb 2, 2018 | Feb 3, 2017 | Jan 29, 2016 | Jan 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Accumulated depreciation | |||||||
| Property, cost | |||||||
| Land | |||||||
| Asset Age Ratio | |||||||
| Average age1 | |||||||
Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).
2020 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, cost – Land)
= 100 × ÷ ( – ) =
| 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. | Lowe’s Cos. Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020. |
Estimated Total Useful Life
Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).
2020 Calculations
1 Estimated total useful life = (Property, cost – Land) ÷ Depreciation expense
= ( – ) ÷ =
| 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. | Lowe’s Cos. Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2018 to 2019 but then slightly increased from 2019 to 2020. |
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).
2020 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
| 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. | Lowe’s Cos. Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level. |
Estimated Remaining Life
Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).
2020 Calculations
1 Estimated remaining life = (Property, less accumulated depreciation – Land) ÷ Depreciation expense
= ( – ) ÷ =
| Asset age ratio | Description | The company |
|---|---|---|
| Estimated remaining life | Lowe’s Cos. Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2018 to 2019 but then slightly increased from 2019 to 2020. |