Operating assets are the assets directly employed in generating a company's revenues — property, plant and equipment, intangible assets, inventories, trade receivables and prepaid expenses. They form the productive base of the business and are the primary focus of capital expenditure and working capital management. In business valuation, the return on operating assets (ROCE = NOPAT / Operating Assets) measures economic profitability, while the comparison between ROCE and WACC determines whether the company is creating or destroying economic value.

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Example: a Swiss specialty chemicals company presents CHF 20.0 million of operating assets generating CHF 2.58 million NOPAT — a 12.9% ROCE. Against a WACC of 9.5%, the positive 3.4% spread generates annual EVA of CHF 680,000. This sustained competitive return justifies an enterprise value above book operating assets, quantified as the capitalised present value of excess returns in a residual income valuation model.

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Hectelion analyses operating asset returns as a core value creation measure in every business valuation engagement.