What is Capital?

What is Capital? While there are three types of traditional capital, you’ll often refer to capital as financial capital. Financial capital is the amount of money or assets that a business will need to make their products or offer their services. You can break business financial capital down into three categories. First up is: Debt capital which is also considered borrowings. This allows a business to borrow money to fund ventures. Next up is: Equity capital which is money raised from investors that fund the company’s operations. This is considered an investment by individual investors, whether public or private. And Lastly, working capital which measures the illiquidity of a business. It takes current assets minus the liabilities. Working capital measures the ability a business has to pay off its current obligations. Working capital is used to buy inventory and to keep the business healthy.