Analysis of Property, Plant and Equipment
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Raytheon Co. pages available for free this week:
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Reportable Segments
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
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Property, Plant and Equipment Disclosure
Raytheon Co., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Land
- The reported value of land shows a gradual decline over the analyzed period, decreasing from 86 million US dollars at the end of 2015 to 81 million US dollars by the end of 2019. This suggests a slight divestment or revaluation of land assets.
- Buildings and improvements
- This category demonstrates an upward trend, rising from 2,530 million US dollars in 2015 to 3,068 million US dollars in 2019. The increase is consistent year-over-year, indicating ongoing investment or capital improvements in buildings and related infrastructure.
- Machinery and equipment
- Machinery and equipment values have shown significant growth, increasing from 3,917 million US dollars in 2015 to 5,436 million US dollars in 2019. The steady annual increases point toward continuous acquisition or upgrades of operational assets.
- Property, plant and equipment, gross
- The gross property, plant, and equipment figure reflects the combined growth in buildings and machinery, advancing from 6,533 million US dollars at the end of 2015 to 8,585 million US dollars in 2019. This consistent increase indicates a broad expansion in asset base.
- Accumulated depreciation and amortization
- Accumulated depreciation and amortization have also increased, moving from -4,528 million US dollars in 2015 to -5,232 million US dollars in 2019. The rise in accumulated depreciation mirrors the growth in asset base and usage, representing systematic allocation of cost over asset life.
- Property, plant and equipment, net
- The net value of property, plant, and equipment shows a notable upward trend, growing from 2,005 million US dollars in 2015 to 3,353 million US dollars in 2019. This increase signifies that asset additions and capital investments outpace depreciation, resulting in an expanding asset base net of wear and tear.
Asset Age Ratios (Summary)
Raytheon Co., asset age ratios
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The analysis of the property, plant, and equipment data over the five-year period reveals several notable trends and insights.
- Average Age Ratio (%)
- The average age ratio has shown a consistent decline each year, moving from 70.23% at the end of 2015 to 61.52% by the end of 2019. This indicates that the overall property, plant, and equipment are becoming relatively newer over time, suggesting either the addition of newer assets or the disposal of older ones at a pace that reduces the weighted average age.
- Estimated Total Useful Life (in years)
- The estimated total useful life remained steady at 21 years from 2015 through 2018 but decreased slightly to 20 years in 2019. This minor adjustment may reflect a reassessment of the asset lifespan based on new information or changes in asset composition.
- Estimated Age, Time Elapsed Since Purchase (in years)
- The estimated age of assets decreased steadily from 15 years in 2015 and 2016 to 12 years in 2019. This reduction aligns with the downward trend in the average age ratio, reinforcing the observation that the company is either acquiring new assets or retiring older ones at a rate sufficient to bring down the average asset age.
- Estimated Remaining Life (in years)
- There is a modest increase in the estimated remaining life from 6 years in 2015 to 8 years in 2019. After remaining stable at 7 years from 2016 through 2018, the increase suggests either an extension in the expected usability of existing assets or the integration of newer assets with longer remaining lifespans.
Overall, the data indicates a trend towards renewal and modernization of property, plant, and equipment, characterized by a declining average age ratio and estimated asset age, as well as a slight extension in expected remaining useful life. This could enhance operational efficiency and potentially reduce maintenance costs over the medium term.
Average Age
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property, plant and equipment, gross – Land)
= 100 × ÷ ( – ) =
- Accumulated Depreciation and Amortization
- The accumulated depreciation and amortization has shown a steady increase over the five-year period, rising from 4,528 million USD in 2015 to 5,232 million USD in 2019. This consistent growth suggests ongoing usage and aging of fixed assets, contributing to the rising accumulated wear and tear accounted for in the financial statements.
- Property, Plant and Equipment, Gross
- The gross value of property, plant, and equipment has increased progressively each year, moving from 6,533 million USD at the end of 2015 to 8,585 million USD in 2019. This upward trend indicates significant investments or capital expenditures in fixed assets, reflecting expansion or modernization efforts within the company.
- Land
- The valuation of land held shows a slight decline over the observed period, decreasing from 86 million USD in 2015 to 81 million USD in 2019. This marginal decrease may imply disposals, revaluations, or limited acquisition activity related to land assets.
- Average Age Ratio
- The average age ratio has steadily decreased from 70.23% in 2015 to 61.52% in 2019. This decline suggests that the asset base is relatively newer or that replaced assets have reduced the overall aging of the property, plant, and equipment portfolio. It aligns with the increase in gross property, plant, and equipment, indicating ongoing asset renewal or additions.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Estimated total useful life = (Property, plant and equipment, gross – Land) ÷ Depreciation and amortization expense of property, plant and equipment, net
= ( – ) ÷ =
- Property, Plant and Equipment, Gross
- The gross value of property, plant, and equipment showed a consistent upward trend over the analyzed period. Starting at 6,533 million USD at the end of 2015, it rose steadily each year to reach 8,585 million USD by the end of 2019. This indicates continuous investment or acquisition of fixed assets during this timeframe.
- Land
- The land component of property, plant, and equipment remained relatively stable but exhibited a slight downward trend. The value decreased from 86 million USD in 2015 to 81 million USD in 2019, reflecting minor disposals or revaluations taking place over the years.
- Depreciation and Amortization Expense of Property, Plant and Equipment, Net
- This expense showed a consistent increase from 307 million USD in 2015 to 420 million USD in 2019. The rising trend aligns with the growing gross property, plant, and equipment base, which leads to higher accumulated depreciation and amortization charges as assets age and new assets are added.
- Estimated Total Useful Life
- The estimated useful life of the property, plant, and equipment remained constant at 21 years from 2015 through 2018, but was slightly reduced to 20 years in 2019. This adjustment may suggest a reevaluation of asset longevity or changes in asset composition affecting the depreciation schedule.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Time elapsed since purchase = Accumulated depreciation and amortization ÷ Depreciation and amortization expense of property, plant and equipment, net
= ÷ =
- Accumulated Depreciation and Amortization
- The accumulated depreciation and amortization steadily increased each year from 4,528 million US dollars in 2015 to 5,232 million US dollars in 2019. This indicates a consistent recognition of depreciation and amortization expenses over the analyzed period, reflecting ongoing usage and aging of property, plant, and equipment assets.
- Depreciation and Amortization Expense of Property, Plant, and Equipment, Net
- The annual depreciation and amortization expense also demonstrated an upward trend, rising from 307 million US dollars in 2015 to 420 million US dollars in 2019. The increase in expense suggests either additions to depreciable assets, changes in depreciation methods or useful life estimates, or increased asset usage leading to higher expense recognition annually.
- Time Elapsed Since Purchase
- The time since purchase values decreased from 15 years in 2015 and 2016 down to 12 years in 2019. This progressive decrease implies that newer assets have been added to the portfolio, effectively reducing the average age of property, plant, and equipment over time.
- Overall Analysis
- The combined trends indicate a scenario where the company is actively maintaining and possibly expanding its asset base. The consistent rise in accumulated depreciation coupled with increasing annual depreciation expenses aligns with asset additions and ongoing capital investment. Simultaneously, the declining average age of assets suggests a shift towards newer equipment, which could enhance operational efficiency and decrease risk related to asset obsolescence.
Estimated Remaining Life
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
2019 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Depreciation and amortization expense of property, plant and equipment, net
= ( – ) ÷ =
- Property, Plant and Equipment, Net
- The value of property, plant, and equipment, net, shows a consistent increasing trend from 2015 to 2019. It rose from $2,005 million in 2015 to $3,353 million in 2019, reflecting a significant investment or acquisition of assets over the five-year period. The growth appears steady with no signs of decline or stagnation.
- Land
- The value attributed to land exhibits a slight downward trend. Beginning at $86 million in 2015, the value decreased gradually each year, ending at $81 million in 2019. This reduction could indicate either disposals of land holdings or revaluation adjustments impacting the carrying amount of land assets.
- Depreciation and Amortization Expense of Property, Plant and Equipment, Net
- The depreciation and amortization expense consistently increased year-over-year, starting from $307 million in 2015 and rising to $420 million in 2019. This rising expense aligns with the increasing net value of property, plant, and equipment, suggesting an expanding asset base subject to depreciation.
- Estimated Remaining Life
- The estimated remaining life of the property, plant, and equipment remained relatively stable at 7 years for most years, except for a slight decrease to 6 years in 2015 and an increase to 8 years in 2019. The variation is minor but could reflect updates in asset lifespan estimates or the nature of newly acquired assets.