Definition:
The term Capital has several meanings and it is used in many business contexts. In general, capital is accumulated assets or ownership. More specifically,
- Capital is the amount of cash and other assets owned by a business. These business assets include accounts receivable, equipment, and land/buildings of the business.
- Capital can also represent the accumulated wealth of a business, represented by its assets less liabilities.
- Capital can also mean stock or ownership in a company.
Capital Used in Other Business Terms
Other associated terms which relate to the term "capital" are:
- Capital gains are increases in the value of stock and other assets when they are sold.
- Capital assets, which sounds like a redundancy
- The capital structure of a business is the mix of debt and equity in the business balance sheet.
- Capital improvements are improvements made to capital assets.
- Venture capital is private funding (capital investment) provided by individuals or other businesses to new business ventures.
- A capital lease is a lease of business equipment which represents ownership and is reflected on the company's balance sheet as an asset.
- A capital contribution is a contribution of capital, in the form of money or property, to a business by an owner, partner, or shareholder. The contribution increases the owner's equity interest in the business.
Examples:
A common cause of business failure is not having enough capital.
