what is a non operating asset 
a non operating asset is a class of assets that are not essential to the ongoing operations of a business but may still generate income or provide a return on investment roi these assets are listed on a company s balance sheet along with its operating assets and they may or may not be broken out separately understanding a non operating assetnon operating assets are also known as redundant assets because they do not support operations and are therefore considered to be redundant and expendable if a company needs to cash them in that said companies hold non operating assets for several reasons for example a company may own a parcel of land assessed at 300 000 in value but has no plans to build on the property for at least five years until it is used the land is considered to be a non operating asset common non operating assets include unallocated cash and marketable securities loans receivable idle equipment and vacant land the correct identification of non operating assets is an important step in the valuation process because these can often be overlooked by analysts and investors furthermore analysis based on a cash flows approach will not capture the value of non operating assets these assets have to be valued separately and added to the operating value of the business non operating assets may be assets related to a closed portion of the business in this case the company can choose to hold onto the assets with the intention of selling or using them in the future for example imagine a business owns several retail locations and it closes one of its locations the business operations in that building have ceased and the company still owns the building because the building is no longer instrumental in the business s day to day operations it is labeled as non operating however the building still holds value that could be tapped into in the future so it is also considered an asset using non operating assets to diversify riskin other cases non operating assets can be used to diversify operational risks for example a business may own some real estate or patents simply as cash investments although these assets are not tied to the business s operations the company may still earn some revenue from them if the business loses money through its operations these non operating assets can provide diversification and act as a financial backup non operating assets and non operating incomenon operating income refers to revenue an organization earns that is not connected to its core operations in some cases non operating income comes from non operating assets to continue with the above example if the business rents out its empty retail location the money it collects in rent is non operating income similarly if a company has investments that are not related to its operations the returns it earns on those investments are classified as non operating income in recent years large corporations realized the risk of being disrupted by rising startups so they created corporate venture capital arms that invest in new ideas that are not necessarily related to their operations where they own assets and generate income as a diversification tool however non operating income does not always come from non operating assets it may also include gains from foreign exchanges or other forms of peripheral income such as a one time gain on investment securities non operating assets may also generate liabilities for the company holding them for example a company holding onto unused land will have liability exposure in the form of taxes due interest owed or lawsuits generated by accidents on that property non operating assets and stock valuationnon operating assets are usually treated separately from operating assets when evaluating a company or its stock the value of non operating assets does count toward the total worth of the company however their value is excluded from financial models that estimate the future growth or profit earning potential of the core business segments although non operating assets may bring revenue into a company they are not used to generate core revenue 