Nonoperating Unit

Nonoperating Unit

A company or department that does not manage any assets or directly conduct any business whatsoever. Rather, a nonoperating unit collects money and distributes it to the appropriate parties. For example, a nonoperating unit may own an asset but lease it to another company. If this is its only activity, the nonoperating unit does nothing except receive lease payments and distribute profits to stockholders or partners.

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nonoperating unit

A firm or a firm's subsidiary that operates no assets on its own but distributes income received from other firms that operate assets leased from the nonoperating company. For example, a railroad may lease its line and equipment to other railroads and merely distribute net income received from the lease payments to the nonoperating railroad's stockholders. Compare operating unit.