Analysis of Property, Plant and Equipment
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Motorola Solutions Inc. pages available for free this week:
- Income Statement
- Cash Flow Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Aggregate Accruals
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Property, Plant and Equipment Disclosure
Motorola Solutions Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Land
- The value of land showed a significant decline from 15 million USD in 2019 to 6 million USD in 2020, followed by a gradual decrease and stabilization at 5 million USD from 2021 through 2023. This trend indicates a reduction in land holdings or a revaluation during the period, with no subsequent recovery.
- Leasehold Improvements
- Leasehold improvements steadily increased from 410 million USD in 2019 to a peak of 474 million USD in 2021. Following this peak, a slight decline occurred, with values dropping to 456 million USD in 2022 and 448 million USD in 2023. The trend suggests ongoing investments in leasehold improvements up to 2021, after which some depreciation or asset disposals may have taken place.
- Machinery and Equipment
- Machinery and equipment exhibited a generally upward trend, rising from 2,051 million USD in 2019 to a peak of 2,439 million USD in 2021. A dip to 2,303 million USD was observed in 2022, followed by a modest recovery to 2,396 million USD in 2023. This pattern indicates continued investment with some fluctuations possibly due to asset sales or write-downs.
- Property, Plant and Equipment, Gross
- The gross value of property, plant, and equipment increased from 2,476 million USD in 2019 to 2,918 million USD in 2021, reflecting asset additions. Subsequently, a decline occurred to 2,764 million USD in 2022, followed by a slight increase to 2,849 million USD in 2023. This suggests a consolidation phase after initial growth.
- Accumulated Depreciation
- Accumulated depreciation consistently increased in absolute terms from -1,484 million USD in 2019 to -1,876 million USD in 2021, indicating ongoing asset depreciation. A reduction in the accumulated depreciation to -1,837 million USD in 2022 was observed, followed by a rise to -1,885 million USD in 2023. This fluctuation may reflect asset disposals or changes in depreciation estimates.
- Property, Plant and Equipment, Net
- Net property, plant, and equipment showed a moderate increase from 992 million USD in 2019 to 1,042 million USD in 2021. However, a notable decrease occurred in 2022 to 927 million USD, with a partial recovery to 964 million USD in 2023. This trend indicates that net asset value peaked in 2021, followed by a decline possibly due to higher depreciation or asset impairments, and a modest rebound thereafter.
Asset Age Ratios (Summary)
Motorola Solutions Inc., asset age ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Average Age Ratio
- The average age ratio exhibited a steady increase from 60.3% in 2019 to a peak of 66.58% in 2022, followed by a slight decrease to 66.28% in 2023. This trend suggests a consistent aging of the property, plant, and equipment assets over the examined period, with the ratio approaching the two-thirds mark by the end of 2023.
- Estimated Total Useful Life
- There was a gradual extension in the estimated total useful life of assets, increasing from 13 years in 2019 to 16 years by 2023. This indicates a reassessment or improvement in asset longevity assumptions that may reflect enhancements in asset durability, maintenance practices, or accounting estimates.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of assets naturally increased from 8 years in 2019 to 11 years in 2023. This aligns with the passage of time and demonstrates that the asset base is aging concurrently with the company’s operational timeline.
- Estimated Remaining Life
- The estimated remaining life remained constant at 5 years throughout the five-year span. Despite the increase in total useful life and asset age, this steady remaining life suggests that asset replacements or additions might be balancing the aging of existing assets, maintaining a stable remaining service horizon.
Average Age
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2023 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Property, plant and equipment, gross – Land)
= 100 × ÷ ( – ) =
- Gross Property, Plant, and Equipment
- The gross value of property, plant, and equipment increased consistently from 2019 to 2021, rising from US$2,476 million to US$2,918 million. However, in 2022, this value declined to US$2,764 million before experiencing a slight recovery to US$2,849 million in 2023. This suggests a period of asset growth followed by a reduction and partial reinstatement in the asset base.
- Accumulated Depreciation
- Accumulated depreciation showed a steady upward trend from 2019 through 2021, moving from US$1,484 million to US$1,876 million. In 2022, the depreciation experienced a slight decrease to US$1,837 million, but rose again to US$1,885 million in 2023. The fluctuations in accumulated depreciation may indicate changes in depreciation policies or disposals of older assets during this period.
- Land
- The recorded value of land assets decreased sharply from US$15 million in 2019 to US$6 million in 2020 and remained relatively stable at US$5 million from 2021 onwards. This reduction might reflect asset disposals or reclassifications, with land holdings stabilizing after the initial decline.
- Average Age Ratio
- The average age ratio of property, plant, and equipment steadily increased from 60.3% in 2019 to 66.28% in 2023, peaking at 66.58% in 2022. This rising trend implies that the asset base is aging, potentially indicating slower asset replacement or investment in newer assets over the years.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2023 Calculations
1 Estimated total useful life = (Property, plant and equipment, gross – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property, Plant and Equipment, Gross
- The gross value of property, plant, and equipment demonstrated an overall increasing trend from 2019 through 2023. It rose from 2476 million US dollars in 2019 to a peak of 2918 million in 2021 before experiencing a slight decrease in 2022 to 2764 million, and then a moderate increase in 2023 reaching 2849 million. This pattern indicates ongoing investments with some fluctuations in asset acquisition or disposals over the years.
- Land
- The value of land assets decreased sharply from 2019 to 2020, dropping from 15 million to 6 million US dollars, then continued to decline marginally to 5 million by 2021 and remained stable at that level through 2023. This suggests a divestment or reduced valuation of land holdings early in the period, with stabilization in the later years.
- Depreciation Expense
- Depreciation expense showed a generally decreasing trend between 2019 and 2023. It increased slightly from 186 million in 2019 to 194 million in 2020 and then to 202 million in 2021, after which it declined to 183 million in 2022 and further to 179 million in 2023. The reduction in depreciation expense in the last two years could reflect changes in the asset base, revisions in asset useful lives, or adjustments in depreciation methods.
- Estimated Total Useful Life
- The estimated total useful life of assets increased steadily from 13 years in 2019 to 16 years in 2023. This upward revision implies a reassessment toward longer asset usability, which may contribute to the observed decrease in depreciation expense over the period.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2023 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation shows a generally upward trend over the five-year period. It increased from $1,484 million at the end of 2019 to $1,885 million by the end of 2023. This indicates a consistent allocation of depreciation expenses over time, reflecting ongoing usage and aging of property, plant, and equipment assets.
- Depreciation Expense
- The annual depreciation expense exhibits some variability but remains relatively stable overall. It increased slightly from $186 million in 2019 to a peak of $202 million in 2021, then declined in the subsequent years to $179 million by 2023. This slight decrease in recent years could suggest changes in asset composition, potential asset disposals, or adjustments in depreciation methods.
- Time Elapsed Since Purchase
- The average time elapsed since purchase of the assets has steadily increased from 8 years in 2019 to 11 years in 2023. This indicates an aging asset base, which may contribute to the observed patterns in depreciation expense and accumulated depreciation.
Estimated Remaining Life
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
2023 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land) ÷ Depreciation expense
= ( – ) ÷ =
- Property, Plant, and Equipment, Net
- The net value of property, plant, and equipment showed a gradual increase from 2019 to 2021, rising from 992 million USD to 1042 million USD. However, this upward trend reversed in 2022, where the value declined to 927 million USD, followed by a modest recovery to 964 million USD in 2023. This pattern suggests possible asset disposals, impairments, or fluctuations in capital expenditures during the latter years.
- Land
- The recorded value of land assets decreased sharply from 15 million USD in 2019 to 6 million USD in 2020. Subsequently, it stabilized at 5 million USD from 2021 through 2023. This sharp decline followed by stabilization may indicate land sales or revaluation early in the period without further significant changes afterward.
- Depreciation Expense
- Depreciation expense experienced a steady increase from 186 million USD in 2019 to a peak of 202 million USD in 2021. Subsequently, it decreased to 183 million USD in 2022 and further to 179 million USD in 2023. The rising depreciation through 2021 aligns with increases in asset base or amortization of recent acquisitions, while the decline in later years may be related to asset disposals, changes in depreciation methods, or aging assets nearing the end of their useful lives.
- Estimated Remaining Life
- The estimated remaining life of the assets remained constant at 5 years throughout the entire period. This suggests a standardized approach to asset valuation or consistent application of depreciation policies over time.