What is 'Capital Recovery'

Capial recovery is the earning back of the initial funds put into an investment. Capital recovery must occur before a company can earn a profit on its investment.

2. A euphemism for debt collection. Capital recovery companies obtain overdue payments from individuals and businesses that have not paid their bills. Upon obtaining payment and remitting it to the company to which it is owed, the capital recovery company earns a fee for its services.

3. A company's recouping of the money it has invested in machinery and equipment through asset disposition and liquidation.

BREAKING DOWN 'Capital Recovery'

1. Initial cost, salvage value and projected revenues factor into a capital recovery analysis when a company is determining whether and at what cost to purchase an asset or invest in a new project.

2. A capital recovery company may specialize in collecting a particular type of debt, such as commercial debt, retail debt or healthcare debt.

3. If a company is going out of business and needs to liquidate its assets or has excess equipment that it needs to sell, it might hire a capital recovery company to appraise and auction off its assets. The company can use the cash from the auction to pay its creditors or to meet its ongoing capital requirements.

RELATED TERMS
  1. Estimated Recovery Value (ERV)

    The projected value of an asset that can be recovered in the ...
  2. Capital Investment

    Funds invested in a firm or enterprise for the purposes of furthering ...
  3. Long-Term Debt To Capitalization ...

    A ratio showing the financial leverage of a firm, calculated ...
  4. Capital Asset

    A type of asset that is not easily sold in the regular course ...
  5. Capital Structure

    A mix of a company's long-term debt, specific short-term debt, ...
  6. Capitalization

    1. In accounting, it is where costs to acquire an asset are included ...
Related Articles
  1. Small Business

    Explaining Cost Of Capital

    Cost of capital is the cost of funds used to finance a business.
  2. Investing

    Target Corp: WACC Analysis (TGT)

    Learn about the importance of capital structure when making investment decisions, and how Target's capital structure compares against the rest of the industry.
  3. Investing

    Evaluating A Company's Capital Structure

    Learn to use the composition of debt and equity to evaluate balance sheet strength.
  4. Small Business

    Understanding Capital Investment

    Capital investment is a term that describes a company’s expenditures for long-term assets used in the operation of its business.
  5. Small Business

    Capital Structure

    Capital structure is the combination of the debt and equity a company uses to finance its long-term operations and growth.
  6. Investing

    Understanding Capital Assets

    A capital asset is one that a company plans on owning for more than one year, and uses in the production of revenue.
  7. Investing

    Financial Markets: Capital Vs. Money Markets

    Two commonly used components of the financial market are money markets and capital markets. Find out the similarities and differences between them.
  8. Insights

    The Best Business To Be In During A Recovery (And Why)

    Where are the best places to be when an economy starts to recover?
RELATED FAQS
  1. What are the different ways that corporations can raise capital?

    Find out about the most common types of debt and equity capital, and how things such as interest and dividend payments factor ... Read Answer >>
  2. Why is working capital management important to a company?

    Learn about a company's working capital; good working capital management is essential to maintaining a company's liquidity ... Read Answer >>
  3. How do interest rates influence a corporation's capital structure?

    Learn about how changing interest rates can affect a corporation's capital structure because of their impact on the cost ... Read Answer >>
  4. Does a high debt to capital ratio make a company a bad investment?

    Understand the debt to capital ratio and why a high debt to capital ratio doesn't necessarily mean that a stock is a bad ... Read Answer >>
  5. What is the difference between cost of debt capital and cost of equity?

    Learn about how the costs of debt and equity capital differ and how to calculate each using interest and tax rates and stock ... Read Answer >>
  6. What does a low working capital ratio show about a company's working capital management?

    Find out the significance of working capital management for a company and look at the working capital ratio analysts use ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center