Return of Capital
Financial Dictionary — Equity & Distributions
Definition
is the distribution of cash that resulted from tax savings on depreciation, sale of a capital asset or securities, or any other sources unrelated to retained earnings.
Detailed Explanation
Return of capital is a distribution to investors that is not a dividend from earnings; it reduces the investor’s invested capital.
Common Uses
- Used to explain the concept in accounting and business contexts.
- Used when training staff or documenting procedures and policies.
- Used when training staff or documenting procedures and policies.
Practical Example
- Example: Teams reference **Return of Capital** when defining terms in manuals, policies, or training materials.
Why This Term Matters
- Why it matters: Improves clarity and consistency across documentation and decision-making.