Of the $10 million in total assets, $4 million is related to financial assets such as marketable securities and short-term investments. Suppose a company has $10 million in total assets and total shareholders’ equity of $7 million. The value of a company’s operating assets is equal to the sum of all operating assets less the value of all non-operating assets. Non-Operating ItemsĪn example of an asset that does NOT qualify as an operating asset would be marketable securities, which would be categorized as an investing activity.ĭespite the short-term investment creating income for the company, it is considered “side income” and a non-core asset unrelated to its core, recurring operations.įurther, an example of a liability that would NOT qualify as an operating liability would be long-term debt, as debt is a financing activity. What is the Difference Between Operating vs. Operating Liabilities: The liabilities of a company that are part of the day-to-day operations (e.g.inventory and the production of products to sell). Operating Assets: The assets of a company required for its core operations to continue functioning (e.g.Operating assets and operating liabilities both support the continuation of revenue production from core operations. Net Operating Assets = Operating Assets – Operating LiabilitiesĪs shown from the formula above, a company’s net operating assets represent the difference between its operating assets and operating liabilities. The formula to calculate net operating assets (NOA) subtracts operating liabilities from operating assets.
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