Explanation of Net Property, Plant, and Equipment:
Also called Capital, Long-Term, Long-Lived, or Tangible Assets and Listed
on the Balance Sheet, these are the fixed assets of the company that do not get
used up during the normal operation of the business. This is also why they are
called long-lived. Most of the value of these long-term assets depreciate
(except land, which has an infinite life span), so the actual figure you will
see will be the difference between the original cost and the cumulated
depreciation. This depreciation is spread over the "useful life" of the
fixed asset.
Importance of Net Property, Plant, and Equipment:
Depending on the industry of the company, the figure for Net Property, Plant,
and Equipment can vary widely. Service companies would be expected to
have a relatively low figure, and manufacturing would be expected to have a
much more significant portion of their assets tied up in fixed assets.
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