Capital

The financial resources available for use in business operations, including both monetary assets and physical assets that can generate value. Capital represents the wealth employed to create more wealth, encompassing everything from cash and investments to equipment and intellectual property. It's a fundamental concept in finance and economics, reflecting the productive capacity of a business.

Consider a manufacturing startup that begins with $2 million in capital, comprising $1.2 million in cash from investors and $800,000 in production equipment. This capital enables the company to begin operations, purchase inventory, hire workers, and fund initial marketing efforts. The efficient deployment of this capital directly impacts the company's ability to generate returns and grow.

Managing capital requires balancing various considerations including cost of capital, capital structure, and return on invested capital. Business leaders must make strategic decisions about capital allocation, weighing factors like risk, return potential, and timing of cash flows.