What is a Non-Operating Asset?

A non-operating asset is an asset that generates income, but is unrelated to the core operations of the company.

How Does a Non-Operating Asset Work?

Also called a redundant asset, a non-operating asset usually generates some form of revenue or return for the owning company, but play no role in the company's operations.

For example, if a company used to manufacture plastic model kits but later moved into manufacturing plush children's toys, the dyes used to create the parts for the model kits would be considered non-operating assets because they are not used in the production of plush toys.

A company's asset portfolio is also an example of a non-operating asset (except in the case of an investment company or mutual fund).

Why Does a Non-Operating Asset Matter?

Companies must report non-operating assets on their balance sheet in order to reflect a complete financial picture. Non-operating assets are excluded in most analyses of growth and revenue projections since they are unrelated to a company's main production capabilities.

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Paul Tracy
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Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

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