Capital refers to assets that add value to a business, supporting its operations. This could include company cars, factory machinery, patents, bank accounts, stocks, bonds, brand names, and even software.
Different sources such as angel investors, personal savings, IPOs, and venture capitalists can provide capital. Economists use capital to evaluate a business's future prospects.
Business capital can be obtained either through business operations or through debt or equity. The capital structure of a company, reflecting its financial liabilities, can be found on its balance sheet. This structure helps investors value the business.
Types of Capital
Working capital is a financial metric used in accounting to express a company's current operating liabilities. It is calculated by subtracting the current liabilities from the total current assets.
Equity capital refers to the financial assets representing the ownership of a company, free of debts or other obligations. The complete rights to the assets of a business are reserved for the investor or shareholder in this case.
Trading capital is the amount of money used by financial institutions or brokerage firms for buying or selling purposes. It helps traders determine the required cash for successful trading.
- Company cars,
- Brand names,
- Financial assets,
- Bank accounts,
- Stocks, Bonds, etc.