explain the capital briefy
Answers
Explanation:
Capital is a term for financial assets, such as funds held in deposit accounts and/or funds obtained from special financing sources. ... Capital assets can include cash, cash equivalents, and marketable securities as well as manufacturing equipment, production facilities, and storage facilities.
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Definition of Capital:
Capital is a term for financial assets, such as funds held in deposit accounts and/or funds obtained from special financing sources. Capital can also be associated with capital assets of a company that requires significant amounts of capital to finance or expand.
Capital can be held through financial assets or raised from debt or equity financing. Businesses will typically focus on three types of business capital: working capital, equity capital, and debt capital. In general, business capital is a core part of running a business and financing capital intensive assets.
Capital assets are assets of a business found on either the current or long-term portion of the balance sheet. Capital assets can include cash, cash equivalents, and marketable securities as well as manufacturing equipment, production facilities, and storage facilities.
Understanding Capital :
From a financial capital economics perspective, capital is a key part of running a business and growing an economy. Companies have capital structures that include debt capital, equity capital, and working capital for daily expenditures. Individuals hold capital and capital assets as part of their net worth. How individuals and companies finance their working capital and invest their obtained capital is critical for growth and return on investment.
Capital is typically cash or liquid assets held or obtained for expenditures. In financial economics, the term may be expanded to include a company’s capital assets. In general, capital can be a measurement of wealth and also a resource that provides for increasing wealth through direct investment or capital project investments.
Capital is used to provide ongoing production of goods and services for creating profit. Companies use capital to invest in all kinds of things for the purpose of creating value for a firm. Labor and building expansions can be two areas where capital is often allocated. By investing through the use of capital, a business or individual directs their money toward investments that earn a higher return than the capital’s costs.
The financial capital economics definition can be analyzed by economists to understand how capital in the economy is influencing economic growth. Economists watch several metrics of capital including personal income and personal consumption from the Commerce Department’s Personal Income and Outlays reports as well as investment found in the quarterly Gross Domestic Product report.
Typically, business capital and financial capital are viewed from the perspective of a company’s capital structure. In the United States, banks are required to hold a specified amount of capital as a risk mitigation requirement (sometimes called economic capital) as directed by the central banks and banking regulations. Other private companies have the responsibility of assessing their own capital thresholds, capital assets, and capital needs for corporate investment. Most of the financial capital analysis for businesses is done by closely analyzing the balance sheet.
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