DEFINITION of 'Appropriation'

1. The act of setting aside money for a specific purpose. A company or a government appropriates funds in order to delegate cash for the necessities of its business operations. This may occur for any of the functions of a business, including setting aside funds for employee salaries, research and development, dividends and all other uses of cash. Federal funds must be appropriated each year for government programs.

In business use, may also be known as "capital allocation."

2. The claiming of land or intellectual property by a company or organization, or otherwise marking ownership of previously unclaimed or contested property.

BREAKING DOWN 'Appropriation'

By getting a clear picture of how a company appropriates its funds, an investor may have a better idea of how it manages cash. This is important in figuring out whether a company uses cash in order to build shareholder value, or whether its frivolous use of cash may lead to destruction of shareholder value.

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