Non-Operating Asset

What is a 'Non-Operating Asset'

Classes of assets that are not essential to the ongoing operations of a business, but may still generate income or provide a return on investment. These assets will be listed on the balance sheet along with operating assets, and may or may not be broken out separately.

Non-operating assets are held by companies for several reasons. It could be an asset related to a closed portion of the business, and might be sold in the future. Non-operating assets can also be used to diversify operational risks (for example by owning some real estate or patents) or simply used as a cash investment.

Also known as "redundant assets".

BREAKING DOWN 'Non-Operating Asset'

Non-operating assets are often valued separately than operating assets when evaluating a company or its stock. Their value is counted towards the total worth of the company, but may be excluded from financial models that estimate the future profit earning potential of the core business segments and the assets used to generate core revenues as these aren't considered to be assets that will generate future earnings and revenue.

RELATED TERMS
  1. Non-Operating Income

    The portion of an organization's income that is derived from ...
  2. Non-Operating Expense

    An expense incurred by activities not relating to the core operations ...
  3. Operating Earnings

    Profit earned after subtracting from revenues those expenses ...
  4. Operating Revenue

    Income derived from sources related to a company's everyday business ...
  5. Non-Operating Cash Flows

    Cash flows (inflows and outflows) that are not related to the ...
  6. Business Asset

    A piece of property or equipment purchased exclusively or primarily ...
Related Articles
  1. Investing

    Explaining Non-Operating Income

    Non-operating income is any profit or loss a business generates through activities that are not related to its core operations.
  2. Managing Wealth

    What's an Asset?

    An asset is a resource with economic value.
  3. Managing Wealth

    What is a Real Asset?

    A real asset is a physical asset that has value.
  4. Personal Finance

    Assessing Bank Assets: Are Your Savings Safe?

    Learn how to determine if your assets are safe or if your bank has spread itself too thin.
  5. Managing Wealth

    Asset Turnover Ratio

    Investopedia explains: The asset turnover ratio is a measure of a company's ability to use its assets to generate sales or revenue, and is a calculation of the amount of sales or revenue generated ...
  6. Managing Wealth

    Explaining Financial Assets

    A financial asset is intangible property that represents a claim on ownership of an entity or contractual rights to future payments.
  7. Investing

    Understanding Capital Assets

    A capital asset is one that a company plans on owning for more than one year, and uses in the production of revenue.
  8. Investing

    Calculating Return on Net Assets

    Return on net assets measures a company’s financial performance.
  9. Markets

    How To Evaluate A Company's Balance Sheet

    Asset performance shows how what a company owes and owns affects its investment quality.
  10. Managing Wealth

    Current Assets

    Current assets are all of the assets a company uses to fund its daily operations. These are the assets the company could convert into cash within a year in the normal course of business.
RELATED FAQS
  1. What is the difference between an income statement and a balance sheet?

    Find the current value of a business by reading the balance statement and determine whether operations are efficient by analyzing ... Read Answer >>
  2. What is the difference between current assets and fixed assets?

    Learn what current assets and fixed assets are, examples of current and non-current assets, and the differences between these ... Read Answer >>
  3. Are stocks real assets?

    Learn why stocks are classified as financial assets, not real assets. Understand the properties that determine whether an ... Read Answer >>
  4. What is the indirect method of calculating cash flow from operating activities?

    Understand why the indirect method is used to calculate a company's cash flow from operating activities, and learn what adjustments ... Read Answer >>
  5. What does an income statement look like?

    Learn about the different parts of an income statement and how investors review them carefully to determine the health of ... Read Answer >>
  6. What is the difference between a fixed asset and a current asset?

    Discover the difference between fixed assets and current assets and the value of each to a company. Learn the category and ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center