What Are Non-Core Assets?

Non-core assets are assets that are either not essential or simply no longer used in a company's business operations. Non-core assets are often sold when a company needs to raise cash. Some businesses sell their non-core assets in order to pay down debt. Although non-core assets are not critical to a company's core operations, they do have value and can generate a return on investment.

Understanding Non-Core Assets

A non-core business asset can be any kind of non-essential asset with respect to generating revenue and the core business operations of the company. A non-core asset could be a factory or property that is no longer being used. Non-core assets might also be an entire subsidiary or a holding in another company. Typically, non-core assets can include the following:

• Real estate
• Commodities
• Idle equipment
• Natural resources
• Investment securities
• Land that's not being used

Non-core assets can also be referred to as non-operating assets because they may generate income or provide a return on their investment but are not essential to the ongoing operation of the company. Apple Inc. might own marketable securities, for example, that generate investment income. However, the securities are not essential to generating revenue for the company's core operation of selling iPhones.

Whether an asset is considered, non-core is entirely relative to the company. An asset that is non-core for one company might be a core asset for another. An oil company might sell off some real estate that's considered a non-core asset. The real estate company that purchases it with the goal of developing it into an office park would consider the property a core asset.

Non-Core Assets vs. Core Assets

Core assets include the assets that are critical to a company and its business operations. In other words, core business assets are needed for the company to generate revenue and remain profitable. Core assets can include equipment, machinery, factories, and distribution channels, such as vehicles. Core assets can also include a trademark or a patent. 

Conversely, non-core assets are the assets that are not critical to the production of a company's goods, nor are they critical to generating revenue. Although non-core assets have value and can be important to a company, they're typically not viewed as core or central to the overall profitability of a company. 

Real World Examples of Non-Core Assets

Sometimes a company will spin off a subsidiary that it considers non-core into a separate company. Selling off non-core assets cannot only raise cash but also make a company more efficient. If those non-core assets required maintenance and other expenses such as taxes, unloading them would eliminate those costs, resulting in greater profitability.