CarMax's depreciation, depletion and amortization for the
three
months ended in Feb. 2024 was $67 Mil. Its depreciation, depletion and amortization for the trailing twelve months (TTM) ended in Feb. 2024 was $260 Mil.
CarMax Depreciation, Depletion and Amortization Historical Data
The historical data trend for CarMax's Depreciation, Depletion and Amortization can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
* Premium members only.
CarMax Annual Data
Trend
Feb15
Feb16
Feb17
Feb18
Feb19
Feb20
Feb21
Feb22
Feb23
Feb24
Depreciation, Depletion and Amortization
215.81
242.16
273.19
265.22
260.41
CarMax Quarterly Data
May19
Aug19
Nov19
Feb20
May20
Aug20
Nov20
Feb21
May21
Aug21
Nov21
Feb22
May22
Aug22
Nov22
Feb23
May23
Aug23
Nov23
Feb24
Depreciation, Depletion and Amortization
62.57
63.00
63.97
66.56
66.89
CarMax Depreciation, Depletion and Amortization Calculation
Depreciation is a present expense that accounts for the past cost of an asset that is now providing benefits.
Depletion and amortization are synonyms for depreciation.
Generally:
The term depreciation is used when discussing man made tangible assets
The term depletion is used when discussing natural tangible assets
The term amortization is used when discussing intangible assets
Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Feb. 2024 adds up the quarterly data reported by the company within the most recent 12 months, which was $260 Mil.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
CarMax (NYSE:KMX) Depreciation, Depletion and Amortization Explanation
One of the key tenets of Generally Accepted Accounting Principles (GAAP) is the matching principle. The matching principle states that companies should report associated costs and benefits at the same time.
For example:
If a company buys a $300 million cruise ship in 1982 and then sells tickets to passengers for the next 30 years, the company should not report a $300 million expense in 1982 and then ticket sales for 1982 through 2012. Instead, the company should spread the purchase price of the ship (the cost) over the same time period it sells tickets (the benefit).
To create income statements that meet the matching principle, accountants use an expense called depreciation.
So, instead of reporting a $300 million purchase expense in 1982, the company might:
Report a $30 million depreciation expense in 1982, 1983, 1984...and every year after that for the 30 years the company expects to sell tickets to passengers on this cruise ship.
To calculate depreciation, a company must make estimates and choices such as:
The cost of the asset
The useful life of the asset
The salvage value of the asset at the end of its useful life
And a way of spreading the cost of the asset to match the time when the asset provides benefits
The range of different ways of spreading the cost under GAAP accounting is too long to list. However, public companies in the United States explain their depreciation choices to shareholders in a note to their financial statements. It is critical that investors read this note. Investors can find this note in the company's 10-K.
Past depreciation expenses accumulate on the balance sheet. Most public companies choose not to show this contra asset account on the balance sheet they present to shareholders. Instead, they simply show a single item. This single asset item may be marked Net. Such as Property, Plant, and Equipment - Net. It is actually the asset account netted against the contra asset account.
A contra asset account is an account that offsets an asset account. So, for example a company might have:
Property, Plant, and Equipment - Gross: $150 million
Accumulated Depreciation: $120 million
Property, Plant, and Equipment - Net: $30 million
In this case, the only item likely to be shown on the balance sheet is Property, Plant, and Equipment - Net. This is the cost of the company's property, plant, and equipment (asset account) minus the accumulated depreciation (the contra asset account). It means the company's assets cost $150 million, the company has reported $120 million in depreciation expense over the years, and the company is now reporting the assets have a book value of $30 million.
It is possible for a company to have fully depreciated assets on its balance sheet. This means the company's estimate of the useful life of the asset was shorter than the asset's actual useful life. As a result, the asset - although it is still being used - is carried on the balance sheet at its salvage value.
This is a reminder that depreciation involves estimates and choices. It is not an infallible process.
Companies do not have cash layout for depreciation. Therefore, depreciation is added back in the cash flow statement.
Although depreciation is not a cash cost, it is a real business cost because the company has to pay for the fixed assets when it purchases them. Both Warren Buffett and Charlie Munger hate the idea of EDITDA because depreciation is not included as an expense. Warren Buffett even jokingly said We prefer earnings before everything when criticizing the abuse of EDITDA.
Be Aware
Depreciation estimates make the calculation of net income susceptible to management's accounting choices. These choices can be either overly aggressive or overly conservative.
CarMax Depreciation, Depletion and Amortization Related Terms
Thank you for viewing the detailed overview of CarMax's Depreciation, Depletion and Amortization provided by GuruFocus.com. Please click on the following links to see related term pages.
CarMax sells, finances, and services used and new cars through a chain of about 240 used retail stores. It was formed in 1993 as a unit of Circuit City and spun off into an independent company in late 2002. Used-vehicle sales typically account for about 83% of revenue (78% in fiscal 2023 due to the chip shortage) and wholesale about 13% (20% in fiscal 2023), with the remaining portion composed of extended service plans and repair. In fiscal 2023, the company retailed and wholesaled 807,823, and 585,071 used vehicles, respectively. CarMax is the largest used-vehicle retailer in the U.S. but still estimates that it has only about 4% U.S. market share of vehicles 0-10 years old in 2022. It seeks over 5% share by the end of calendar 2025. CarMax is based in Richmond, Virginia.
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