Property, Plant, and Equipment

RECENT NEWS
newratings.com  Aug 12  Comment 
CANBERA (dpa-AFX) - Asian stocks ended broadly higher for a second day in a row Tuesday, with sentiment lifted by overnight gains in the U.S. and European markets as concerns that geopolitical events could derail the global economic recovery...
Cloud Computing  Aug 6  Comment 
COLUMBUS, OH--(Marketwired - August 06, 2014) - Focusing on improving the health and safety of student-athletes, the Missouri State High School Activities Association (MSHSAA) has announced the approval for its member high schools to use the...
Wall Street Journal  Jul 31  Comment 
Telefónica reported a 4.9% rise in second-quarter net profit, as it booked smaller a depreciation of its fixed assets, offsetting another decline in revenue.
NPR  Jul 24  Comment 
The head-to-toe protective gear is designed to prevent Ebola from infecting health care workers, yet some do contract the disease. It's not the suit's fault. It's likely a case of human error.
Bulk Transporter  Jul 18  Comment 
Ensuring that workers wear proper personal protective equipment (PPE) must be a regular part of every safety program for tank truck fleets, storage terminals, tank truck wash racks, and maintenance departments. It is a critical part of providing a...
Cloud Computing  Jul 10  Comment 
COLUMBUS, OH--(Marketwired - July 10, 2014) - The Tennessee Secondary School Athletic Association (TSSAA) has announced the approval for its member high schools to use the PrivIT e-PPE (electronic Pre-Participation Evaluation) solution to replace...
Motley Fool  Jun 13  Comment 
The most in-depth free report on 3D Systems ever.
The Economic Times  May 30  Comment 
Tata Chemicals had to make higher provisions for the impairment of fixed assets and goodwill at its Magadi plant in Kenya, amounting to Rs 924 crore.
The Hindu Business Line  May 9  Comment 
In the previous article of this series, we took a look at one of the components of a balance sheet - 'Source of funds' and what its key constituents are. In the next few articles, we will take a l...
Cloud Computing  May 6  Comment 
COLUMBUS, OH--(Marketwired - May 06, 2014) - The Georgia High School Association (GHSA) has announced the approval to allow its member high schools to use the PrivIT e-PPE (electronic Pre-Participation Evaluation) solution to replace the current...




RELATED WIKI ARTICLES
 

Property, Plant, and Equipment is the total value of a business' most essential assets, which cannot easily be liquidated

Property, plant & equipment (PP&E) are those assets essential to the company's business including (as the name suggests) the property on which the company does business and the equipment essential for the business' continued operations. Often, PP&E assets are tailored to be production specific and as such have little resale value. Over time, the value of these assets are generally depreciated to more accurately reflect their current worth to the company. The term "fixed assets" is often used in place of "property, plant and equipment" and the two terms are functionally equivalent.

It should be noted that while most PP&E assets (such as motor vehicles or computers) depreciate over time, land and buildings can often increase in value depending on local real-estate conditions.

Property, Plant, and Equipment are listed along with Long-Term Investments and intangible assets as non-current assets on a company's balance sheet.

Because PP&E assets are highly illiquid, investors often use the metric as a gauge of how quickly a company can adapt to dramatic shifts in the industry. In theory, companies with high PP&E relative to their total book value are less capable of adapting quickly to new and emerging trends, as they are incapable of converting assets acquired or developed for very specific purposes into cash or other, newly necessary assets.

Example

  • Oil and Gas Co (XYZ) decides to build oil rigs on the site of an oil-well. This costs a total of $3 million, which is added to PP&E on the balance sheet. XYZ's Petroleum Engineers determine that the useful life of the rigs is five years (about how long they think the well will continue to produce oil). Using straight-line depreciation, XYZ lists $600,000 in depreciation costs (3 million / 5) on their balance sheet each year for five years - at which point the rigs are fundamentally worthless to XYZ. It should be noted that even though the rigs represent real value to XYZ over the five years of their usefulness, because they were built for a specific purpose in a specific location and cannot easily be moved or deconstructed and rebuilt, their value is not in any way transferable or liquid. Worst case scenario, they can be sold as scrap metal, but it is highly unlikely XYZ can resell these rigs for anything close to their initial costs.
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki