Analysis of Property, Plant and Equipment
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Property, Plant and Equipment Disclosure
Stryker Corp., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The financial data indicates a consistent upward trend in the values related to property, plant, and equipment over the analyzed five-year period.
- Land, buildings and improvements
- There is a steady increase from 936 million US dollars in 2017 to 1,656 million US dollars in 2021. This represents a significant growth, highlighting continuous investment or valuation appreciation in these assets.
- Machinery and equipment
- The value rises consistently from 2,864 million US dollars in 2017 to 3,842 million US dollars in 2021. This suggests ongoing capital expenditure or upgrades in machinery and equipment, reflecting expansion or modernization efforts.
- Property, plant and equipment, gross
- The gross value shows a steady increase year by year, moving from 3,800 million US dollars in 2017 to 5,498 million US dollars in 2021. This aligns with the growth observed in the aforementioned asset categories, indicating cumulative asset additions.
- Allowance for depreciation
- The negative values representing accumulated depreciation increase in absolute terms from -1,825 million US dollars in 2017 to -2,665 million US dollars in 2021. The rising depreciation reflects the aging of assets and systematic allocation of asset cost over time.
- Property, plant and equipment, net
- The net property, plant and equipment values, calculated as gross value minus accumulated depreciation, increase from 1,975 million US dollars in 2017 to 2,833 million US dollars in 2021. This positive net asset growth indicates that additions and improvements to assets outpace depreciation.
Overall, the data exhibits a pattern of sustained asset growth and capital investment, with depreciation charges rising but not offsetting the increments in gross asset values. This trend suggests an expanding property, plant, and equipment base supporting the company's operational capabilities.
Asset Age Ratios (Summary)
Stryker Corp., asset age ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The analysis of the annual property, plant, and equipment data reveals several notable trends regarding the average age, estimated useful life, and age composition of the assets.
- Average Age Ratio
- The average age ratio fluctuated slightly over the five-year period, starting at 48.03% in 2017, decreasing to a low of 45.55% in 2019, and then increasing again to 48.47% by the end of 2021. This indicates a modest reduction in the relative age of the assets until 2019, followed by a gradual aging of the asset base toward the end of the period.
- Estimated Total Useful Life
- The estimated total useful life of the assets was constant at 14 years for 2017 and 2018, then increased to 15 years from 2019 onward. This suggests a reassessment or extension of the expected operational lifespan of the assets starting in 2019.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of the assets showed minor variations. It decreased from 7 years in 2017 to 6 years in 2018, then remained stable at 7 years for the subsequent years. This slight dip might reflect acquisitions or disposals affecting the average age.
- Estimated Remaining Life
- The estimated remaining life increased from 7 years in 2017 and 2018 to 8 years in 2019 and remained stable thereafter. This aligns with the increase in total useful life, indicating an expectation of longer asset usability going forward.
Overall, the data depict an asset base that underwent a slight rejuvenation in 2018 and 2019, as evidenced by the temporary drop in average age ratio and estimated age. The extension of the total estimated useful life from 14 to 15 years in 2019, along with an increase in remaining life, suggests a reevaluation of asset longevity, potentially reflecting improvements in asset condition or maintenance practices. The average age ratio’s increase in later years may indicate fewer new acquisitions or aging assets outpacing additions. These trends could impact depreciation policies and capital investment strategies.
Average Age
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Allowance for depreciation | ||||||
| Property, plant and equipment, gross | ||||||
| Asset Age Ratio | ||||||
| Average age1 | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Average age = 100 × Allowance for depreciation ÷ Property, plant and equipment, gross
= 100 × ÷ =
- Allowance for Depreciation
- The allowance for depreciation has shown a steady increase over the five-year period. Starting at $1,825 million in 2017, it rose annually to reach $2,665 million by the end of 2021. This consistent growth suggests ongoing accumulation of depreciation expenses, reflecting either continued asset use or the acquisition of depreciable assets over time.
- Property, Plant, and Equipment, Gross
- The gross value of property, plant, and equipment also exhibited a clear upward trend during the period under review. Beginning at $3,800 million in 2017, the value increased each year, reaching $5,498 million at the end of 2021. This growth indicates significant investment in fixed assets, either through purchasing or capital improvements, contributing to the company's asset base expansion.
- Average Age Ratio
- The average age ratio, which indicates the relative age of the company's fixed asset base, fluctuated slightly but remained within a narrow range over the five years. It decreased from 48.03% in 2017 to a low of 45.55% in 2019, suggesting a period where newer assets may have been acquired relative to the accumulated depreciation. However, from 2020 onwards, the ratio increased back to 48.47% by 2021, indicating a possible slowing in asset renewal or a growing proportion of older assets within the total equipment base.
- Summary Insights
- The concurrent growth in both gross property, plant, and equipment and the allowance for depreciation confirms sustained capital investment coupled with steady asset usage. Although the average age ratio's minor fluctuations reflect changes in asset age dynamics, the overall stability near 48% suggests a balanced asset lifecycle management strategy. The company appears to maintain and expand its asset base, while managing depreciation in a manner consistent with gradual asset aging patterns.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Estimated total useful life = Property, plant and equipment, gross ÷ Depreciation expense
= ÷ =
- Property, Plant and Equipment (Gross)
- The gross value of property, plant, and equipment showed a consistent upward trend throughout the five-year period. Starting at 3,800 million USD in 2017, the value increased each year, reaching 5,498 million USD by the end of 2021. This represents an approximate 44.7% growth over the period, indicating ongoing investments and additions to fixed assets.
- Depreciation Expense
- The depreciation expense also increased steadily each year, rising from 271 million USD in 2017 to 371 million USD in 2021. The increase in depreciation expense aligns with the growth in gross property, plant, and equipment, reflecting the aging and utilization of newly acquired and existing assets. The increase over the period amounts to about 37%, somewhat less aggressive than the growth in gross assets.
- Estimated Total Useful Life
- The estimated total useful life of the assets was stable at 14 years during 2017 and 2018 but increased to 15 years starting from 2019 and remained constant thereafter. This slight increase in useful life may suggest changes in asset composition, improvements in asset longevity, or adjustments in accounting estimates.
- Overall Analysis
- There is a strong and steady growth in the gross value of property, plant, and equipment, reflecting active capital expenditure. The depreciation expense rise is consistent with asset growth, but the extended estimated useful life from 2019 likely slightly moderates the rate of increase in annual depreciation. The data suggests a strategic commitment to expanding operational capacity and possibly an improvement in asset durability or utilization efficiency.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Time elapsed since purchase = Allowance for depreciation ÷ Depreciation expense
= ÷ =
The financial data indicates trends in property, plant, and equipment elements, specifically focusing on allowance for depreciation, depreciation expense, and the average time elapsed since purchase over a five-year period ending December 31, 2021.
- Allowance for Depreciation
- This figure has shown a consistent increase each year, from US$1,825 million in 2017 to US$2,665 million in 2021. The steady rise suggests ongoing accumulation of depreciation against the property, plant, and equipment assets, indicating sustained investment and usage over time.
- Depreciation Expense
- The depreciation expense has also increased progressively from US$271 million in 2017 to US$371 million in 2021. This upward trend reflects higher annual charges, which could be due to new capital expenditures, changes in depreciation policies, or reassessment of asset lives. The increase is moderate but consistent with the rising allowance for depreciation.
- Time Elapsed Since Purchase
- The average age of the assets remained between 6 and 7 years throughout the period, showing relative stability. There was a decrease from 7 years to 6 years in 2018, followed by a return to 7 years for the subsequent years. This suggests that asset additions or disposals have balanced the age profile of the asset base, maintaining a generally consistent usage life.
Overall, the data reveals a pattern of ongoing asset depreciation with increasing accumulated depreciation and depreciation expense. The stable asset age suggests a balanced asset management approach, maintaining a consistent replacement or acquisition cycle over the observed years.
Estimated Remaining Life
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Estimated remaining life = Property, plant and equipment, net ÷ Depreciation expense
= ÷ =
- Property, Plant and Equipment, Net
- The net value of property, plant, and equipment exhibits a consistent upward trend over the five-year period. Beginning at $1,975 million at the end of 2017, it increased each year, reaching $2,833 million by the end of 2021. This steady growth indicates ongoing investment in fixed assets or capital expenditures exceeding the impact of depreciation and disposals.
- Depreciation Expense
- The depreciation expense has also risen consistently from $271 million in 2017 to $371 million in 2021. This increase aligns with the growth in net property, plant, and equipment, reflecting higher asset bases subject to depreciation. The rising depreciation expense may suggest both asset additions and possibly the introduction of assets with shorter useful lives or accelerated depreciation methods over the period.
- Estimated Remaining Life
- The estimated remaining life of the property, plant, and equipment was stable at 7 years in 2017 and 2018, before increasing to 8 years starting in 2019 and remaining unchanged through 2021. This extension could suggest the acquisition of newer assets with longer useful lives or reassessment of the existing asset base, which could affect the rate of depreciation going forward.