Capital Recovery


DEFINITION of 'Capital Recovery'

1. 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.

  1. Business Recovery Risk

    A company's exposure to loss as a result of damage to its ability ...
  2. Recovery Property

    A specific class of depreciable real estate. Recovery property ...
  3. Modified Accelerated Cost Recovery ...

    The new accelerated cost recovery system, created after the release ...
  4. Accelerated Cost Recovery System ...

    A system of depreciation introduced by the Economic Recovery ...
  5. Global Recovery Rate

    A global measurement in the proportion of businesses that managed ...
  6. Earnings Stripping

    Earnings Stripping is a commonly-used tactic by multinationals ...
Related Articles
  1. Insurance

    Working Capital Works

    A company's efficiency, financial strength and cash-flow health show in its management of working capital.
  2. Investing Basics

    The Working Capital Position

    Learn how to correctly analyze a company's liquidity and beat the average investor.
  3. Fundamental Analysis

    The Capital Asset Pricing Model: An Overview

    CAPM helps you determine what return you deserve for putting your money at risk.
  4. Fundamental Analysis

    Catch On To The CCAPM

    The consumption capital asset pricing model smoothes over some of CAPM's weaknesses to make sense of risk aversion.
  5. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  6. Investing

    Where the Price is Right for Dividends

    There are two broad schools of thought for equity income investing: The first pays the highest dividend yields and the second focuses on healthy yields.
  7. Personal Finance

    How Tech Can Help with 3 Behavioral Finance Biases

    Even if you’re a finance or statistics expert, you’re not immune to common decision-making mistakes that can negatively impact your finances.
  8. Investing Basics

    5 Tips For Diversifying Your Portfolio

    A diversified portfolio will protect you in a tough market. Get some solid tips here!
  9. Entrepreneurship

    Identifying And Managing Business Risks

    There are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.
  10. Forex Education

    Explaining Uncovered Interest Rate Parity

    Uncovered interest rate parity is when the difference in interest rates between two nations is equal to the expected change in exchange rates.
  1. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  2. How can I use a regression to see the correlation between prices and interest rates?

    In statistics, regression analysis is a widely used technique to uncover relationships among variables and determine whether ... Read Full Answer >>
  3. How do I calculate the rule of 72 using Matlab?

    In finance, the rule of 72 is a useful shortcut to assess how long it takes an investment to double given its annual growth ... Read Full Answer >>
  4. How do I calculate a modified duration using Matlab?

    The modified duration gauges the sensitivity of the fixed income securities to changes in interest rates. To calculate the ... Read Full Answer >>
  5. How do I calculate the standard error using Matlab?

    In statistics, the standard error is the standard deviation of the sampling statistical measure, usually the sample mean. ... Read Full Answer >>
  6. How do I adjust the rule of 72 for higher accuracy?

    The rule of 72 refers to a time value of money formula that investors use to calculate how quickly an investment will double ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center