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Walmart Inc. (WMT)

Analysis of Property, Plant and Equipment

Difficulty: Advanced

Property, Plant and Equipment Accounting Policy

Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are expensed as incurred. The following table summarizes Walmart’s estimated useful lives that are generally used to depreciate the assets on a straight-line basis:

Estimated Useful Lives
Land N/A
Buildings and improvements 3-40 years
Fixtures and equipment 1-30 years
Transportation equipment 3-15 years
Construction in progress N/A

Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining expected lease term. Total depreciation and amortization expense for property and equipment, property under financing obligations, property under capital leases and intangible assets for fiscal 2019, 2018 and 2017 was $10.7 billion, $10.5 billion and $10.1 billion, respectively.

Source: 10-K (filing date: 2019-03-28).

Property, Plant and Equipment Disclosure

Walmart Inc., Statement of Financial Position, Property, Plant and Equipment

US$ in millions

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Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015 Jan 31, 2014
Land 24,526  25,298  24,801  25,624  26,261  26,184 
Buildings and improvements 101,006  101,155  98,547  96,845  97,496  95,488 
Fixtures and equipment 54,488  52,695  48,998  47,033  45,044  42,971 
Transportation equipment 2,316  2,387  2,845  2,917  2,807  2,785 
Construction in process 3,474  3,619  4,301  4,539  5,787  5,661 
Property under capital lease and financing obligations 12,760  12,703  11,637  11,096  5,239  5,589 
Property and equipment, including property under capital lease and financing obligations, gross 198,570  197,857  191,129  188,054  182,634  178,678 
Accumulated depreciation and amortization (87,175) (83,039) (76,951) (71,538) (65,979) (60,771)
Property and equipment, including property under capital lease and financing obligations, net 111,395  114,818  114,178  116,516  116,655  117,907 

Based on: 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01), 10-K (filing date: 2014-03-21).

Item Description The company
Property and equipment, including property under capital lease and financing obligations, gross 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. Walmart Inc.’s property and equipment, including property under capital lease and financing obligations, gross increased from 2017 to 2018 and from 2018 to 2019.
Property and equipment, including property under capital lease and financing obligations, 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. Walmart Inc.’s property and equipment, including property under capital lease and financing obligations, net increased from 2017 to 2018 but then declined significantly from 2018 to 2019.

Property, Plant and Equipment Ratios (Summary)

Walmart Inc., Property, Plant and Equipment Ratios

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Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015 Jan 31, 2014
Average age 50.09% 48.12% 46.26% 44.04% 42.19% 39.85%
Estimated total useful life (years) 16 16 17 17 17 17
Estimated age, time elapsed since purchase (years) 8 8 8 8 7 7
Estimated remaining life (years) 8 9 9 10 10 10

Based on: 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01), 10-K (filing date: 2014-03-21).

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. Walmart Inc.’s average age of depreciable property, plant and equipment deteriorated from 2017 to 2018 and 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. Walmart Inc.’s estimated total useful life of depreciable property, plant and equipment declined from 2017 to 2018 and from 2018 to 2019.
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Walmart Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.
Estimated remaining life Walmart Inc.’s estimated remaining life of depreciable property, plant and equipment declined from 2017 to 2018 and from 2018 to 2019.

Average Age

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Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015 Jan 31, 2014
Selected Financial Data (US$ in millions)
Accumulated depreciation and amortization 87,175  83,039  76,951  71,538  65,979  60,771 
Property and equipment, including property under capital lease and financing obligations, gross 198,570  197,857  191,129  188,054  182,634  178,678 
Land 24,526  25,298  24,801  25,624  26,261  26,184 
Ratio
Average age1 50.09% 48.12% 46.26% 44.04% 42.19% 39.85%

Based on: 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01), 10-K (filing date: 2014-03-21).

2019 Calculations

1 Average age = 100 × Accumulated depreciation and amortization ÷ (Property and equipment, including property under capital lease and financing obligations, gross – Land)
= 100 × 87,175 ÷ (198,570 – 24,526) = 50.09%

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. Walmart Inc.’s average age of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.

Estimated Total Useful Life

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Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015 Jan 31, 2014
Selected Financial Data (US$ in millions)
Property and equipment, including property under capital lease and financing obligations, gross 198,570  197,857  191,129  188,054  182,634  178,678 
Land 24,526  25,298  24,801  25,624  26,261  26,184 
Depreciation and amortization expense for property and equipment, property under financing obligations and property under capital leases 10,700  10,500  10,000  9,400  9,100  8,800 
Ratio
Estimated total useful life (years)1 16 16 17 17 17 17

Based on: 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01), 10-K (filing date: 2014-03-21).

2019 Calculations

1 Estimated total useful life (years) = (Property and equipment, including property under capital lease and financing obligations, gross – Land) ÷ Depreciation and amortization expense for property and equipment, property under financing obligations and property under capital leases
= (198,570 – 24,526) ÷ 10,700 = 16

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. Walmart Inc.’s estimated total useful life of depreciable property, plant and equipment declined from 2017 to 2018 and from 2018 to 2019.

Estimated Age, Time Elapsed since Purchase

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Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015 Jan 31, 2014
Selected Financial Data (US$ in millions)
Accumulated depreciation and amortization 87,175  83,039  76,951  71,538  65,979  60,771 
Depreciation and amortization expense for property and equipment, property under financing obligations and property under capital leases 10,700  10,500  10,000  9,400  9,100  8,800 
Ratio
Time elapsed since purchase (years)1 8 8 8 8 7 7

Based on: 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01), 10-K (filing date: 2014-03-21).

2019 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation and amortization ÷ Depreciation and amortization expense for property and equipment, property under financing obligations and property under capital leases
= 87,175 ÷ 10,700 = 8

Ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company’s fixed assets. Useful for comparison purposes. Walmart Inc.’s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2017 to 2018 and from 2018 to 2019.

Estimated Remaining Life

Microsoft Excel LibreOffice Calc
Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015 Jan 31, 2014
Selected Financial Data (US$ in millions)
Property and equipment, including property under capital lease and financing obligations, net 111,395  114,818  114,178  116,516  116,655  117,907 
Land 24,526  25,298  24,801  25,624  26,261  26,184 
Depreciation and amortization expense for property and equipment, property under financing obligations and property under capital leases 10,700  10,500  10,000  9,400  9,100  8,800 
Ratio
Estimated remaining life (years)1 8 9 9 10 10 10

Based on: 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01), 10-K (filing date: 2014-03-21).

2019 Calculations

1 Estimated remaining life (years) = (Property and equipment, including property under capital lease and financing obligations, net – Land) ÷ Depreciation and amortization expense for property and equipment, property under financing obligations and property under capital leases
= (111,395 – 24,526) ÷ 10,700 = 8

Ratio Description The company
Estimated remaining life Walmart Inc.’s estimated remaining life of depreciable property, plant and equipment declined from 2017 to 2018 and from 2018 to 2019.