What is capital



Contents

  • 1 The concept of capital
  • 2 types of capital
  • 3 The difference between money and capital
  • 4 References

The concept of capital

The concept of capital, according to the Business Dictionary, indicates that it is wealth in the form of cash, or assets , which is evidence of the financial strength of an individual, organization, or nation, and is used for development and investment, [1] and in another definition of capital it represents the financial resources used by companies, In order to finance its activities, such as machinery, equipment, and other resources, it is a vital source of financing, and it is assets that enable businesses to produce products and services, and provide them to people. The capital is raised by companies by selling stocks and bonds to investors. Either cash, or by assets. [2]

Types of capital

Here are some types of capital: [3]
  • Debt capital is the capital obtained through the borrowing process, and it can be obtained through banks, insurance institutions, friends, family, or from other sources.
  • Equity capital: It is the capital that is built on investments, and does not need to be repaid, such as debt capital, and private investment is one example of this type of capital.
  • Working capital: It is the 
  • capital that indicates the difference between the assets traded by companies, and between the dues and liabilities, and is used to measure the extent of short-term liquidity of companies, and the extent of the companies' ability to pay off their debts within one year.
  • Commercial capital: Commercial capital is called financing, and it refers to money intended for the sale and purchase of securities.

The difference between money and capital

Many people believe that money and capital symbolize the same thing, but there is a difference between them. Money refers to the tool that is used in selling products, goods, and services to people directly, and capital refers to the tool that contributes to building companies, developing them, and what they own. From monetary resources, or in the form of assets. [3]

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