Net Operating Assets Calculator
Analyze a company's operational performance with the help of Calcopolis.
This handy online net operating assets calculator (NOA calculator) allows you to assess the company's operational performance.
This article will teach you what NOA is, how it can be calculated, and why it is so important. After reading this text, you will be able to calculate your company's net operating assets, interpret the results and identify possible optimizations.
What are net operating assets?
Net Operating Assets (NOA) is a financial metric defined as the difference between a business's operating assets minus its operating liabilities.
NOA focuses on operating activities and excludes all financial activities from its analysis. Therefore, earned interest and interest expenses are not the subjects of this analysis.
Thanks to this, NOA is a clear indicator of a company's operational effectiveness.
How to calculate net operating assets?
The calculation of net operating assets is pretty simple. The key is to identify the value of its key components correctly. Therefore below, we explain how to calculate the NOA value.
Calculate operating assets
The operating assets are the sum of all operational revenue-generating assets:
- the cash
- accounts receivable
- prepaid expenses
- fixed assets
Calculate operating liabilities
Operating liabilities are the sum of all non-financial expenses you need to cover:
- accounts payable
- accrued operating expenses
Calculate net operating assets
The NOA value is the difference between those previously calculated values. You may use our NOA calculator to find its value or use the formula below.
The NOA formula
NOA = operating assets - operating liabilities
You may further expand this formula to:
NOA = (cash + accounts receivable + prepaid expenses + fixed assets + inventory) - (accounts payable + accrued operating expenses)
The importance of net operating assets analysis
The NOA analysis allows the decoupling company's operational performance from financial earnings. It will enable analyzing how well the company handles its day-to-day business.
Companies that recently raised a high amount of investment capital may benefit from increased interest earnings, which may obscure the business's actual performance.
On the other hand, highly leveraged companies are subject to high-interest charges, which may decrease overall net profit. However, the NOA calculation will reveal the actual business operational performance.
What are operating assets?
Operating assets are the group of assets that contribute to revenue generation - for example, cash, accounts receivables, inventory, etc.
What are operating liabilities?
Operating liabilities are the group of liabilities the company has to cover to maintain its core business operations - for example, accounts payable (amounts invoiced by the suppliers) and accrued expenses (amounts owed to the suppliers but not invoiced yet).
What are fixed assets?
Fixed assets are a group of assets with a long duration, which cannot be quickly sold and turned into cash - for example, real estate or in general property, plant, and equipment (PP&E)
To better understand company assets and the value they provide to the company, you may calculate the Return on Assets ratio.
See our other calculators for investors if you wish to perform an in-depth analysis of a company's health.