Normal operating activities definition

What are Normal Operating Activities?

Normal operating activities are the ongoing activities engaged in by a business to pursue its mission. Organizations typically track the profitability of their normal operating activities separately from their other activities, to determine whether their financial situation is fundamentally sound.

Examples of Normal Operating Activities

Several examples of normal operating activities are noted below, where each one addresses a different industry:

• Retail industry. Processing customer sales, managing inventory, and restocking merchandise are normal operating activities for a retail store. These tasks are essential to daily business operations and directly tied to revenue generation.

• Manufacturing industry. In a manufacturing firm, purchasing raw materials, running production lines, and assembling finished goods are considered normal operating activities. These activities represent the core function of transforming inputs into marketable products.

• Financial services industry. For a bank, issuing loans, accepting deposits, and processing customer transactions are normal operating activities. These functions are integral to delivering financial services and generating interest income and fees.