Microsoft Excel LibreOffice Calc

Thermo Fisher Scientific Inc. (NYSE:TMO)

Analysis of Property, Plant and Equipment

Advanced level

Property, Plant and Equipment Disclosure

Thermo Fisher Scientific Inc., balance sheet: property, plant and equipment

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Land 396  397  401  306  276 
Buildings and improvements 1,873  1,729  1,662  1,154  1,051 
Machinery, equipment and leasehold improvements 5,495  4,694  4,276  2,956  2,787 
Property, plant and equipment, at cost 7,764  6,820  6,339  4,416  4,114 
Accumulated depreciation and amortization (3,015) (2,655) (2,292) (1,838) (1,665)
Property, plant and equipment, net 4,749  4,165  4,047  2,578  2,449 

Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25).

Item Description The company
Property, plant and equipment, at 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. Thermo Fisher Scientific Inc.’s property, plant and equipment, at cost increased from 2017 to 2018 and from 2018 to 2019.
Property, plant and equipment, net 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. Thermo Fisher Scientific Inc.’s property, plant and equipment, net increased from 2017 to 2018 and from 2018 to 2019.

Asset Age Ratios (Summary)

Thermo Fisher Scientific Inc., asset age ratios

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Average age ratio 40.92% 41.34% 38.60% 44.71% 43.39%
Estimated total useful life (years) 13 12 14 11 10
Estimated age, time elapsed since purchase (years) 5 5 5 5 4
Estimated remaining life (years) 8 7 8 6 6

Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25).

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. Thermo Fisher Scientific Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
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. Thermo Fisher Scientific Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Thermo Fisher Scientific Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Estimated remaining life Thermo Fisher Scientific Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.

Average Age

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Accumulated depreciation and amortization 3,015  2,655  2,292  1,838  1,665 
Property, plant and equipment, at cost 7,764  6,820  6,339  4,416  4,114 
Land 396  397  401  306  276 
Asset Age Ratio
Average age1 40.92% 41.34% 38.60% 44.71% 43.39%

Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property, plant and equipment, at cost – Land)
= 100 × 3,015 ÷ (7,764 – 396) = 40.92%

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. Thermo Fisher Scientific Inc.’s average age ratio of depreciable property, plant and equipment deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Estimated Total Useful Life

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Property, plant and equipment, at cost 7,764  6,820  6,339  4,416  4,114 
Land 396  397  401  306  276 
Depreciation and amortization expense of property, plant and equipment 564  526  439  380  373 
Asset Age Ratio (Years)
Estimated total useful life1 13 12 14 11 10

Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Estimated total useful life = (Property, plant and equipment, at cost – Land) ÷ Depreciation and amortization expense of property, plant and equipment
= (7,764 – 396) ÷ 564 = 13

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. Thermo Fisher Scientific Inc.’s estimated total useful life of depreciable property, plant and equipment decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.

Estimated Age, Time Elapsed since Purchase

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Accumulated depreciation and amortization 3,015  2,655  2,292  1,838  1,665 
Depreciation and amortization expense of property, plant and equipment 564  526  439  380  373 
Asset Age Ratio (Years)
Time elapsed since purchase1 5 5 5 5 4

Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Time elapsed since purchase = Accumulated depreciation and amortization ÷ Depreciation and amortization expense of property, plant and equipment
= 3,015 ÷ 564 = 5

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. Thermo Fisher Scientific Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Estimated Remaining Life

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Property, plant and equipment, net 4,749  4,165  4,047  2,578  2,449 
Land 396  397  401  306  276 
Depreciation and amortization expense of property, plant and equipment 564  526  439  380  373 
Asset Age Ratio (Years)
Estimated remaining life1 8 7 8 6 6

Based on: 10-K (filing date: 2020-02-26), 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Depreciation and amortization expense of property, plant and equipment
= (4,749 – 396) ÷ 564 = 8

Asset age ratio Description The company
Estimated remaining life Thermo Fisher Scientific Inc.’s estimated remaining life of depreciable property, plant and equipment decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.