What is Capital?

In business and finance, Capital refers to financial resources or assets that a business can use to fund operations, invest in growth, or acquire other assets. It typically includes both equity (owner’s investment) and debt (borrowed funds).

Types of Capital:

• Equity Capital: Funds invested by owners or shareholders.

• Debt Capital: Loans, bonds, or credit facilities obtained from external sources.

• Working Capital: Day-to-day funds available for operational expenses.

• Human and Intellectual Capital: Non-financial resources like workforce talent and proprietary knowledge.

Importance:

• Enables business expansion and innovation

• Supports ongoing operational needs

• Acts as a buffer against financial downturns

• Determines a company’s capital structure and financial risk profile