What Are Non-Core Assets?
Non-core assets are assets that are either not essential or simply no longer used in a company's business operations. Non-core assets are often sold when a company needs to raise cash. Some businesses sell their non-core assets in order to pay down their debt.
Non-Core Assets Explained
A non-core asset can be any kind of asset, including an entire subsidiary or a holding in another company. But often non-core assets are things such as real estate, commodities, natural resources, currencies, or securities. A non-core asset might also be factory or property that is no longer being used.
Whether an asset is considered non-core is entirely relative to the company. An asset that is non-core for one company might be core for another. An oil company might sell off some real estate it considers non-core to a real estate company that wants to develop it into an office park. In that case, the property would be a core asset for the real estate company.
Example of Non-Core Assets
Sometimes a company will spin off a subsidiary that it considers non-core into a separate company. In 2017, for example, Honeywell spun off its home products division and its transportation division into two separate publicly traded companies. The company retained its aerospace and building divisions and two others.
Selling off non-core assets cannot only raise cash but also make a company more efficient. If those non-core assets required maintenance and other expenses such as taxes, unloading them would eliminate those costs, resulting in greater profitability.