Analysis of Property, Plant and Equipment
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- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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Property, Plant and Equipment Disclosure
Alphabet Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The reported property, plant, and equipment demonstrates significant growth over the observed period. A substantial increase is evident in several key components, indicating ongoing investment in infrastructure and capacity expansion. The presentation of information shifts in 2023, with a more detailed breakdown of property and equipment categories becoming available.
- Gross Property and Equipment
- Gross property and equipment increased from US$147.012 billion in 2021 to US$171.710 billion in 2022. This growth continued, reaching US$201.803 billion in 2023, US$250.426 billion in 2024, and culminating in US$345.082 billion in 2025. The legacy gross property and equipment figures are only reported for 2021 and 2022, suggesting a change in reporting methodology or asset categorization beginning in 2023.
- Technical Infrastructure
- Technical infrastructure represents the largest component of property and equipment, and exhibits the most substantial growth. Starting at US$112.504 billion in 2023, it increased to US$139.596 billion in 2024 and further to US$203.679 billion in 2025. This suggests a significant and accelerating investment in technology and related infrastructure.
- Office Space
- Office space also shows consistent growth, albeit at a slower pace than technical infrastructure. It increased from US$40.435 billion in 2023 to US$43.714 billion in 2024 and US$48.348 billion in 2025. This indicates continued investment in physical office locations, though proportionally less than the investment in technical infrastructure.
- Assets Not Yet in Service
- Assets not yet in service demonstrate a considerable increase, rising from US$35.136 billion in 2023 to US$50.597 billion in 2024 and US$78.592 billion in 2025. This substantial growth suggests a significant pipeline of future asset additions and potential capacity expansion.
- Accumulated Depreciation
- Accumulated depreciation increased consistently throughout the period, from US$49.413 billion in 2021 to US$59.042 billion in 2022, US$67.458 billion in 2023, US$79.390 billion in 2024, and US$98.485 billion in 2025. The increasing depreciation expense is consistent with the growth in gross property and equipment.
- Net Property and Equipment
- Net property and equipment, calculated as gross property and equipment less accumulated depreciation, increased from US$97.599 billion in 2021 to US$112.668 billion in 2022, US$134.345 billion in 2023, US$171.036 billion in 2024, and US$246.597 billion in 2025. This growth reflects the combined effect of increased investment in property and equipment and the corresponding depreciation expense.
The overall trend indicates a significant and sustained investment in property, plant, and equipment, particularly in technical infrastructure and assets not yet in service. This suggests a strategic focus on long-term growth and capacity expansion.
Asset Age Ratios (Summary)
Alphabet Inc., asset age ratios
Based on: 10-K (reporting date: 2025-12-31), 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).
An analysis of property, plant, and equipment age-related metrics reveals several noteworthy trends over the five-year period. The average age ratio demonstrates a consistent decline, while estimates of useful life and remaining life exhibit fluctuations. These changes suggest a potential shift in the composition of the asset base and depreciation strategies.
- Average Age Ratio
- The average age ratio decreased from 33.61% in 2021 to 28.54% in 2025. This indicates a relative reduction in the proportion of assets nearing the end of their useful lives, or an increased proportion of newer assets within the overall asset base. The most significant decrease occurred between 2023 and 2024, falling from 33.43% to 31.70%, and continued into 2025.
- Estimated Total Useful Life
- The estimated total useful life initially decreased from 14 years in 2021 to 13 years in 2022, then increased to 17 years in 2023. It subsequently decreased to 16 years in 2024 and remained stable at 16 years through 2025. This fluctuation could be attributed to revisions in depreciation policies, changes in the types of assets being acquired, or improved estimates of asset longevity. The increase in 2023 is particularly notable.
- Estimated Age & Remaining Life
- The estimated age, representing the time elapsed since purchase, decreased from 5 years in 2021 to 4 years in 2022, then increased to 6 years in 2023, and decreased again to 5 years in 2024 and 2025. This pattern mirrors the fluctuations observed in the estimated total useful life. The estimated remaining life increased from 10 years in 2021 to 11 years in 2023, decreased to 11 years in 2024, and further increased to 12 years in 2025. The increasing trend in remaining life, particularly from 2024 to 2025, aligns with the declining average age ratio and suggests a potential lengthening of asset lifecycles or a shift towards acquiring assets with longer expected useful lives.
In summary, the observed trends suggest a dynamic asset base with adjustments to useful life estimations. The declining average age ratio, coupled with the increasing remaining life, indicates a potential modernization of the asset portfolio or a refinement of depreciation methodologies. Further investigation into the specific asset acquisitions and depreciation policies would be necessary to fully understand these changes.
Average Age
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Accumulated depreciation | ||||||
| Property and equipment, gross | ||||||
| Asset Age Ratio | ||||||
| Average age1 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
2025 Calculations
1 Average age = 100 × Accumulated depreciation ÷ Property and equipment, gross
= 100 × ÷ =
An examination of the financial information reveals increasing investment in property and equipment alongside a changing pattern in accumulated depreciation and the average age ratio. Gross property and equipment values demonstrate consistent growth over the five-year period, while accumulated depreciation also increases, though at a varying rate. The average age ratio exhibits a decreasing trend, suggesting a relative shift towards newer assets.
- Property and Equipment, Gross
- The gross value of property and equipment increased steadily from US$147,012 million in 2021 to US$345,082 million in 2025. The largest year-over-year increase occurred between 2023 and 2024, rising from US$201,803 million to US$250,426 million. This indicates a significant expansion of the asset base during that period.
- Accumulated Depreciation
- Accumulated depreciation also increased consistently, moving from US$49,413 million in 2021 to US$98,485 million in 2025. The rate of increase in accumulated depreciation accelerated between 2022 and 2023 (US$9,629 million increase) and again between 2023 and 2024 (US$11,932 million increase), potentially reflecting increased depreciation expense associated with the growing asset base. The increase between 2024 and 2025 was US$19,095 million.
- Average Age Ratio
- The average age ratio decreased from 33.61% in 2021 to 28.54% in 2025. This downward trend suggests that, relative to the total gross value of property and equipment, the proportion represented by older, depreciated assets is declining. This could be due to a higher rate of acquisition of new assets compared to the rate of depreciation of existing assets, or a deliberate strategy to modernize the asset base. The most substantial decrease in the ratio occurred between 2024 and 2025, falling from 31.70% to 28.54%.
In summary, the observed trends suggest a period of substantial investment in property and equipment, coupled with a decreasing average age ratio. This indicates a relatively young and actively updated asset base, which could have implications for future capital expenditure requirements and depreciation expense.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2025-12-31), 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).
2025 Calculations
1 Estimated total useful life = Property and equipment, gross ÷ Depreciation of property and equipment
= ÷ =
Over the five-year period, significant growth is observed in both gross property and equipment and associated depreciation expenses. Simultaneously, the estimated total useful life of these assets exhibits fluctuations, though generally remaining within a narrow range.
- Gross Property and Equipment
- The value of gross property and equipment demonstrates a consistent upward trend, increasing from US$147,012 million in 2021 to US$345,082 million in 2025. This represents a substantial increase, indicating significant investment in fixed assets over the period. The rate of increase appears to accelerate from 2023 onwards.
- Depreciation Expense
- Depreciation expense also increases over the period, rising from US$10,273 million in 2021 to US$21,136 million in 2025. While generally correlated with the growth in gross property and equipment, the depreciation expense experienced a decrease in 2023, before resuming its upward trajectory. This suggests potential changes in the composition of the asset base or depreciation methods employed.
- Estimated Total Useful Life
- The estimated total useful life of property and equipment shows some variability. It decreased from 14 years in 2021 to 13 years in 2022, then increased to 17 years in 2023. Subsequently, it decreased to 16 years in 2024 and remained constant at 16 years in 2025. The fluctuations suggest potential revisions in the company’s assessment of asset longevity, possibly influenced by technological advancements or changes in usage patterns. The stabilization at 16 years in the most recent two years may indicate a more consistent approach to useful life estimation.
The interplay between increasing asset values, rising depreciation, and fluctuating useful life estimates warrants further investigation. The decrease in estimated useful life in the initial years, followed by an increase, and then stabilization, could be indicative of evolving investment strategies and asset management practices. The acceleration in both gross property and equipment and depreciation in later years suggests a period of intensified capital expenditure and subsequent expense recognition.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2025-12-31), 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).
2025 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation of property and equipment
= ÷ =
Analysis reveals a consistent increase in accumulated depreciation over the five-year period, indicating a growing proportion of property, plant, and equipment (PP&E) has been utilized over time. Simultaneously, the annual depreciation expense exhibits fluctuations, though generally trending upwards. The reported time elapsed since purchase provides context for these observations.
- Accumulated Depreciation
- Accumulated depreciation increased steadily from US$49,413 million in 2021 to US$98,485 million in 2025. This represents a substantial overall increase, suggesting significant asset utilization and the passage of time. The largest single-year increase occurred between 2023 and 2024, rising by US$11,932 million, and again between 2024 and 2025, rising by US$19,095 million. This acceleration could indicate increased capital spending in prior years now being reflected in higher depreciation charges, or a change in depreciation methods.
- Depreciation Expense
- Depreciation expense initially rose from US$10,273 million in 2021 to US$13,475 million in 2022, a considerable increase. It then decreased slightly to US$11,946 million in 2023 before resuming an upward trend, reaching US$15,311 million in 2024 and US$21,136 million in 2025. The increase from 2024 to 2025 is particularly noteworthy, mirroring the accelerated growth in accumulated depreciation. This suggests a correlation between new asset acquisitions and the subsequent recognition of depreciation expense.
- Time Elapsed Since Purchase
- The reported time elapsed since purchase fluctuates. It decreased from 5 years in 2021 to 4 years in 2022, then increased to 6 years in 2023, and subsequently decreased to 5 years in both 2024 and 2025. This suggests a pattern of ongoing asset replacement or acquisition. The decrease in time elapsed indicates the introduction of newer assets, while the increase suggests a period where assets were held for a longer duration before replacement. The consistency of 5 years in the most recent two periods may indicate a stabilization of the asset lifecycle.
In summary, the observed trends suggest a dynamic PP&E portfolio with ongoing investment and utilization. The increasing accumulated depreciation and depreciation expense, coupled with the fluctuating time elapsed since purchase, point to a continuous cycle of asset acquisition, utilization, and eventual replacement or disposal.
Estimated Remaining Life
Based on: 10-K (reporting date: 2025-12-31), 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).
2025 Calculations
1 Estimated remaining life = Property and equipment, net ÷ Depreciation of property and equipment
= ÷ =
Over the five-year period, net property and equipment exhibited a substantial and accelerating upward trend. Simultaneously, depreciation expense also increased, though not at the same rate as the gross increase in property and equipment. The reported estimated remaining life of these assets demonstrates fluctuations, but generally indicates an extension over time.
- Property and Equipment Growth
- Net property and equipment increased from US$97,599 million in 2021 to US$246,597 million in 2025. The growth rate accelerated significantly; the increase from 2021 to 2022 was US$15,069 million, while the increase from 2024 to 2025 was US$75,561 million. This suggests a period of increasingly substantial investment in property, plant, and equipment.
- Depreciation Expense
- Depreciation expense rose from US$10,273 million in 2021 to US$21,136 million in 2025. While increasing, the rate of increase was less pronounced than that of the property and equipment balance. The increase from 2021 to 2022 was US$3,202 million, and from 2024 to 2025 was US$5,825 million. This disparity suggests that new asset additions are either being depreciated at a slower rate or that a larger proportion of the increase in property and equipment represents assets with longer useful lives.
- Estimated Remaining Life
- The estimated remaining life initially decreased from 10 years in 2021 to 8 years in 2022. However, it then increased to 11 years in 2023, remained stable at 11 years in 2024, and further increased to 12 years in 2025. This pattern could indicate a shift in the composition of asset acquisitions towards those with inherently longer useful lives, or a reassessment of the useful lives of existing assets. The increase in estimated remaining life, coupled with the increasing depreciation expense, suggests that the company is recognizing the cost of its assets over a longer period.
The combination of rapidly increasing property and equipment, rising depreciation, and an extended estimated remaining life warrants further investigation. It is important to understand the nature of the asset acquisitions driving the growth and the rationale behind the changes in estimated useful lives to assess the long-term implications for profitability and capital expenditure.