Capital Recovery

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. Recovery Rate

    The extent to which principal and accrued interest on a debt ...
  3. Bad Debt Recovery

    A debt from a loan, credit line or accounts receivable that is ...
  4. Capital

    1) Financial assets or the financial value of assets, such as ...
  5. Working Capital

    Working capital is a measure of both a company's efficiency and ...
  6. Cost Of Capital

    The required return necessary to make a capital budgeting project, ...
Related Articles
  1. Economics

    Explaining Cost Of Capital

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

    Capital Structure

    This is an important concept in valuing a company.
  3. Bonds & Fixed Income

    Evaluating A Company's Capital Structure

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

    Bankruptcy Costs And Optimal Capital Structure

    We look at how debt and equity work together to form the optimal capital structure.
  5. Economics

    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.
  6. Economics

    Understanding Capital

    Capital has a variety of meanings, but it generally refers to financial resources.
  7. Professionals

    Introduction To Cost Of Capital

    Cost of capital is very important for business budgeting and planning.
  8. Investing Basics

    Will Corporate Debt Drag Your Stock Down?

    Borrowed funds can mean a leg up for companies or the boot for investors. Find out how to tell the difference.
  9. Professionals

    Introduction To Capital Investment Decisions

    Capital investments are funds invested in a firm or enterprise for the purposes of furthering its business objectives
  10. Professionals

    Tax and Bankruptcy Costs

    CFA Level 1 - Tax and Bankruptcy Costs. Learn what effects taxes and bankruptcy costs have on capital structure. Contrasts the benefits of tax with the costs of possible bankruptcy.
RELATED FAQS
  1. Does working capital measure liquidity?

    Learn about working capital and liquidity, and how working capital measures the liquidity, efficiency and overall health ... Read Answer >>
  2. How does a company's capitalization structure affect its profitability?

    Learn about capitalization structure and how the combination of debt and equity a company uses to fund operations can affect ... Read Answer >>
  3. 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 >>
  4. 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 >>
  5. What does high working capital say about a company's financial prospects?

    Learn about net working capital and what a high figure indicates about a company's financial prospects, including the importance ... Read Answer >>
  6. What does low working capital say about a company's financial prospects?

    Find out what it means when a company has low working capital, including how this metric is interpreted based on business ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center