How To Calculate Net Operating Assets And Case Examples

To know the term net operating assets, the first thing you have to understand is about assets as a whole. Simply put, these assets are usually divided into two parts, namely operational and non-operational assets.

If you already know both, then you can easily calculate net operating assets. What is it and how do you find out? This article will explain in more detail about this.

What is Net Operating Asset?

Usually net operating assets have separate operating activities from their financing activities, this is done so that business operations can be assessed accurately.

In general, net operating assets are company assets that are directly related to assets such as machinery, equipment, patents, merchandise. Then it is reduced by debts or obligations directly related to its operations.

The simple formula that you can understand is as follows:

Net Operating Assets = Total Assets – Total Liabilities

In terms of the above understanding that net operating assets aim to measure how much asset efficiency is in a business. so that the calculation can be compared with net operating profit.

On the other hand, assets and liabilities are also very important for companies to carry out business activities, where the assets themselves are usually known as receivables, cash, fixed assets, inventories, prepaid assets, long-term investments, and deferred tax assets.

In addition, net operating assets are also related to investment capital which is in the form of long-term debt, and short-term in the form of dividends.

The other simple formula in net operating assets is:

(+) Total Assets of the Company

(-) Total Liability

(-) All Financial Assets

(-) All Financial Liabilities

(=) Net Operating Assets

Where in conclusion net operating assets is a calculation used to assess the company, by comparing the calculation of operational activities with financing activities.

Know the Characteristics of Fixed and Current Assets

The characteristics of fixed assets in net operating assets are:

  • Assets with relatively large nominal prices.
  • The fixed assets have a useful life of more than one year, so the period is longer.
  • Fixed assets belonging to the company are used for future savings, not for sale of fixed assets .
  • Assets are used for the company’s operational activities.
  • Fixed assets have a shape and size that can be seen clearly.

Furthermore, the characteristics of current assets in net operating assets are:

  • Easy to trade and use in less than 12 months.
  • Can be stored by the company so that it can be traded again.
  • Assets issued have a relatively short period of time, so they can be issued within 12 months after the end of the balance sheet period.
  • In the form of this asset in the form of cash or cash.

Case Example of Net Operating Assets (Net Operating Assets)

In understanding the calculation of net operating assets, here are examples that you can know, namely:

ABCDEFGH Company has total assets of $ 700,000,000, cash of $ 40,000,000, total liabilities of $ 200,000,000, up to long-term loans of $ 40,000,000. So the calculation of net operating assets is:

Net Operating Assets = Total Assets – Financing Assets – (Total Liabilities + Financing Liabilities)

= $ 700,000,000 – $ 40,000,000 – ($ 200,000.00 + $ 40,000,000)

= $ 660,000,000 – $ 240,000,000

= $ 420.000.000

Once you get the net operating assets, it will be easier for you to compare the operating profit of the business. It can be seen that income from operating activities is a percentage of net assets to obtain profit.

In other words, the calculation of net operating assets as in the case above is also related to the calculation of return on net operating assets. To make it easier for you to understand, the following is an example of a table of net operating and non-operating activities of a company from 2018 to 2020.

Operational Activities andYear
Non -Operating (Finance)201820192020
NET OPERATING ASSETS
Operating Assets
Cash$ 300.000.000$ 400.000.000$ 500.000.000
Accounts receivable – net$ 40.000.000$ 20.000.000$ 80.000.000
Supplies – clean$ 500.000.000$ 300.000.00$ 100.000.000
Down payment$ 80.000.000$ 90.000.000$ 60.000.000
Prepaid taxes$ 30.000.000$ 20.000.000$ 15.000.000
Deferred tax assets – net$ 20.000.000$ 30.000.000$ 25.000.000
Tax refund bill$ 40.000.000$ 40.000.000$ 15.000.000
Miscellaneous assets$ 80.000.000$ 120.000.000$ 150.000.000
TOTAL OPERATING ASSETS$ 1.090.000.000$ 1.020.000.000$ 945.000.000
Operation Obligations
Accounts payable$ 400.000.000$ 280.000.000$ 300.000.000
Tax debt$ 150.000.000$ 200.000.000$ 180.000.000
Work wage obligations$ 80.000.000$ 100.000.000$ 95.000.000
Deferred tax liability$ 75.000.000$ 65.000.000$ 55.000.000
Other liabilities$ 30.000.000$ 50,000,000$ 65.000.000
TOTAL OPERATING OBLIGATIONS$ 735.000.000$ 695.000.000$ 695.000.000
TOTAL NET OPERATION ASSETS$ 355.000.000$ 325.000.000$ 250.000.000

This is an explanation of how to calculate net operating assets. So it can be concluded that net operating assets is a calculation that is able to produce a level of efficiency and effectiveness of the value of the company’s activities.

In the financial statements, net operating assets will appear on the balance sheet on the asset side and reduce the value of liabilities. Regarding company assets, if you find it difficult to calculate the depreciation cost of company assets, then you can use Harmony bookkeeping software.


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