Average operating assets refers to the normal amount of those assets needed to conduct the ongoing operations of a business. This figure can be included in the operating assets ratio, which compares the proportion of these assets to the total amount of assets that a business owns. A high ratio indicates that company management is making good use of its assets.
- Aggregate the balances in these accounts for the end of the preceding period.
- Aggregate the balances in these accounts for the end of the current period.
- Add the two totals together and then divide by two.
The average operating assets figure can also be compared to annual sales on a trend line. This information reveals whether a business is becoming more or less efficient in its use of assets to generate sales.