Non-Operating Asset

What It Is:

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

How It Works/Example:

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 It Matters:

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.