‘Average useful life’, ‘Average age of PPE assets’ and ‘Asset Turnover’ are three measures that decision makers can use to analyse the PPE (Property, Plant & Equipment) assets of entities. Fresh Food Ltd and Cheap Food Ltd operate in the same industry. Each entity depreciates its PPE (Property, Plant & Equipment) assets using the straight line approach. An investigation of their financial statements reveals the following information:
| (Amounts in millions) | ||
| Fresh Food Ltd | Cheap Food Ltd | |
| Sales | $ 22,653 | $ 33,812 |
| Total Assets (Average) | 22,088 | 36,167 |
| Accumulated Depreciation | 2,701 | 4,359 |
| Depreciation Expense | 381 | 697 |
| Cost of Plant Assets (Average) | 7,715 | 10,237 |
Required:
What conclusion concerning the management of plant assets can be drawn from these data? (word limit: 180 – 240 words)
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