Abstract
Cash recovery rates (CRR) can be used to evaluate the profitability of firms. Calculation of the CRR begins with calculating cash recovery, which includes cash from operations, proceeds from the disposal of long-term assets, and interest expense. This is followed by the calculation of average gross assets, which are comprised of average total assets and accumulated depreciation. The CRR is obtained by dividing cash recoveries by average gross assets. CRRs are generally stable for large and mature firms. Large, mature firms with stable CRRs can use the CRR as the discount rate and as a profitability measure.