Appendix B presents selected disclosures from the 10-K of Facebook Inc. Compute

Question

Appendix B presents selected disclosures from the 10-K of Facebook Inc. Compute net PP&E turnover for 2015 given that sales in 2015 were $17,928. Estimate the useful life, on average, for its depreciable PP&E assets at year-end 2015. By what percentage are Facebook’s assets used up at year-end 2015. Discuss the implications of this for future cash flows at Facebook.

Appendix B Property and Equipment ro and ent consists of the following in millions Land Buildings Leasehold improvements Network equipment Computer software, office equipment and other Construction in progress Total Less: Accumulated depreciation Property and e 2014 153 1,420 304 3,020 149 738 5,784 (2,132 1,817) 3,967 2015 596 2,273 447 3,633 248 622 7,819 ent, net 5,687 Note: Depreciation expense on property and euipment was $1.22 billion, $923 million, and $857 million during 2015, 2014, and 2013, respectively

Explanation / Answer

PP&E turnover = Net Sales/ Net Assests

= 17928/5687

=3.15

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