Analysis of Property, Plant and Equipment
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Present Value of Free Cash Flow to Equity (FCFE)
- Current Ratio since 2005
- Debt to Equity since 2005
- Analysis of Debt
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Property, Plant and Equipment Disclosure
Merck & Co. 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 reported value of land demonstrates a fluctuating but overall declining pattern, beginning at 350 million USD in 2020 and decreasing to 307 million USD by 2024. There are minor recoveries in 2021 and 2023, but the general trend is downward across the five-year period.
- Buildings
- Building assets exhibit a consistent upward trend throughout the reported years. Starting from 12,645 million USD in 2020, the value slightly decreased in 2021 to 12,529 million USD before steadily increasing to reach 16,360 million USD in 2024. This increase indicates ongoing investments or capital improvements in building infrastructure.
- Machinery, equipment and office furnishings
- This category shows minor fluctuations but an overall growth trend. The value decreased slightly from 16,649 million USD in 2020 to 16,303 million USD in 2021, recovered in 2022, and then increased progressively to 18,283 million USD by 2024. This suggests continued acquisitions or upgrades of machinery and equipment assets.
- Construction in progress
- The construction in progress asset value increased steadily from 7,324 million USD in 2020 to a peak of 9,186 million USD in 2022, indicating intensified capital projects during this period. Subsequently, the value declined to 7,984 million USD by 2024, potentially reflecting project completions or a slowdown in new construction activity.
- Property, plant and equipment, at cost
- The total gross book value of property, plant, and equipment shows a consistent upward trajectory, rising from 36,968 million USD in 2020 to 42,934 million USD in 2024. This growth aligns with the patterns observed in buildings, machinery, and construction in progress, reflecting ongoing capital expenditure and asset additions.
- Accumulated depreciation
- Accumulated depreciation displays a generally increasing absolute value (noting the values are negative) from -18,982 million USD in 2020 to -19,155 million USD in 2024. However, there is an anomalous decrease in absolute magnitude during 2021 and 2022, pointing to less depreciation expense recorded or disposals during that timeframe. The increase from 2022 to 2024 is consistent with ongoing asset aging and usage.
- Property, plant and equipment net of accumulated depreciation
- The net book value of property, plant, and equipment shows a strong increasing trend, rising from 17,986 million USD in 2020 to 23,779 million USD in 2024, representing solid growth of approximately 32%. This indicates that asset additions and capital expenditures have outpaced depreciation charges over the period, leading to a strengthening of the company's net fixed asset base.
Asset Age Ratios (Summary)
Merck & Co. 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 shows a declining trend from 51.84% in 2020 to 44.56% in 2023, with a slight increase to 44.94% in 2024. This indicates a general reduction in the relative age of property, plant, and equipment, suggesting ongoing replacement or upgrade activities over the observed period, despite a minor uptick in the last year.
- Estimated Total Useful Life
- The estimated total useful life of the assets fluctuated over the years, moving from 21 years in 2020 to a peak of 24 years in 2021, before descending to 20 years by 2024. This variability suggests adjustments in asset life expectations, possibly reflecting changes in asset composition, technology, or maintenance policies.
- Estimated Age, Time Elapsed Since Purchase
- The estimated age of the assets increased from 11 years in 2020 to 12 years in 2021, then decreased steadily to 9 years by 2024. This decline highlights a trend toward newer assets in the portfolio, potentially indicating recent acquisitions or disposals of older equipment.
- Estimated Remaining Life
- The estimated remaining life held steady at 10-12 years throughout the period, with a slight increase from 10 years in 2020 to 12 years from 2021 to 2023, followed by a minor decline to 11 years in 2024. This stability signals a consistent expectation regarding the longevity of the assets.
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 × ÷ ( – ) =
- Property, Plant, and Equipment, at Cost
- The value of property, plant, and equipment at cost shows a consistent upward trend over the five-year period. It increased from $36,968 million in 2020 to $42,934 million in 2024, reflecting ongoing investments or acquisitions in fixed assets.
- Accumulated Depreciation
- Accumulated depreciation displays a fluctuating pattern. It decreased from $18,982 million in 2020 to $17,985 million in 2022, then started to rise again, reaching $19,155 million in 2024. This fluctuation may indicate varying levels of depreciation expense recognized annually or changes in asset disposals.
- Land
- The land asset value shows minor fluctuations without a clear trend. After declining from $350 million in 2020 to $295 million in 2022, it slightly rebounded to $326 million in 2023 before dropping again to $307 million in 2024. This suggests relative stability with modest valuation adjustments or asset disposals in this category.
- Average Age Ratio
- The average age ratio of the property, plant, and equipment steadily declined from 51.84% in 2020 to 44.94% in 2024. This decreasing trend implies that the asset base is becoming newer on average, possibly due to recent acquisitions or retirements of older equipment.
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) ÷ Depreciation expense
= ( – ) ÷ =
- Property, Plant, and Equipment, at Cost
- The value of property, plant, and equipment at cost showed a consistent upward trend over the five-year period. It increased from $36,968 million in 2020 to $42,934 million in 2024, indicating sustained investment or acquisition activities in these assets.
- Land
- The reported value of land exhibited fluctuations rather than a steady trend. It started at $350 million in 2020, declined to $295 million by 2022, then increased slightly to $326 million in 2023 before decreasing again to $307 million in 2024. This variability could suggest acquisitions and disposals or revaluations during the period.
- Depreciation Expense
- Depreciation expense displayed some variability but an overall increase throughout the period. It decreased from $1,726 million in 2020 to $1,578 million in 2021 but increased steadily thereafter to $2,104 million in 2024. This upward trend in depreciation aligns with the growing value of property, plant, and equipment, reflecting higher amortization due to asset additions or changes in depreciation policies.
- Estimated Total Useful Life
- The estimated total useful life of the assets generally declined, starting at 21 years in 2020, peaking at 24 years in 2021, and then decreasing to 20 years by 2024. This decreasing trend may indicate accelerated depreciation assumptions or changes in the company’s assessment of asset longevity.
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 expense
= ÷ =
- Accumulated Depreciation
- Over the observed period, accumulated depreciation exhibits a fluctuating pattern. It declines from US$18,982 million in 2020 to US$17,985 million in 2022, suggesting either asset disposals, revaluations, or adjustments. Subsequently, it increases to US$19,155 million by 2024, indicating continued asset wear and allocation of costs over time. This fluctuation may reflect changes in the asset base or accounting policy adjustments.
- Depreciation Expense
- Depreciation expense decreases from US$1,726 million in 2020 to US$1,578 million in 2021, then rises to US$2,104 million by 2024. This upward trend from 2021 onwards suggests either increased capital expenditures on property, plant, and equipment or changes in depreciation methods or useful lives applied. The increase in depreciation expense is consistent with the rise in accumulated depreciation in the latter years.
- Time Elapsed Since Purchase
- The average time elapsed since purchase decreases steadily from 11 years in 2020 to 9 years in 2024. This pattern indicates that newer assets are being added to the portfolio, reducing the average age of property, plant, and equipment. A younger asset base typically leads to higher depreciation expenses due to shorter remaining useful lives, which aligns with the observed increase in depreciation expense over the period.
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, at cost, net of accumulated depreciation – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property, Plant and Equipment (Net of Accumulated Depreciation)
- The net value of property, plant, and equipment has shown a consistent upward trend over the five-year period. It increased from $17,986 million in 2020 to $23,779 million in 2024, reflecting ongoing investment and capital expenditures in fixed assets.
- Land
- The reported value of land exhibits minor fluctuations, initially decreasing from $350 million in 2020 to $295 million in 2022, followed by a slight recovery to $326 million in 2023 and then a decrease again to $307 million in 2024. This pattern may indicate occasional disposals or revaluations, with no clear trend of expansion or contraction in land holdings.
- Depreciation Expense
- Depreciation expense experienced some variability during the reviewed period. Initially, the expense declined from $1,726 million in 2020 to $1,578 million in 2021, then increased steadily to $2,104 million by 2024. This increase from 2022 onwards may correspond to higher asset values or changes in depreciation methods or asset composition.
- Estimated Remaining Life of Property, Plant, and Equipment
- The estimated remaining life remained relatively stable, mostly around 12 years from 2021 to 2023, with a slight decrease to 11 years in 2024. The initial estimate was 10 years in 2020. This stability suggests consistent asset aging and replacement policies.