Why to analyse the period when Owner's capital will be recovered?
Investors are interested first in avoiding risk of not recovering their investment, then in the firm's liquidity and solvency and then in profitability. One important measure of risk mitigation is the speed by which Initial Capital can be recovered or the time needed for investors to have their capital back.
Payback defines the time required to recover the original investment and indicates how long it will take for equity to be equal to the original investment. Investors are interested in knowing the answer to: when the investment will "pay itself back"?
The payback period intuitively measures how long something takes to
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