A factory and its equipment, intellectual property like patents, or the financial assets of a company or a person are all examples of things that provide value or benefit to their owners and fall within the wide definition of capital. While money in and of itself might be considered capital, the term is most frequently used to refer to money that is being used for investments or productive purposes.

In general, capital is an essential part of managing a firm’s day-to-day and funding its expansion in the future. Capital can be generated through business operations or acquired through debt or equity financing. Working capital, equity capital, and debt capital are the three types of capital that firms of all sizes commonly concentrate on when creating budgets. A company in the financial sector names trading capital as the fourth element.

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