Finance Dictionary : Capital



Learn about 'Capital' in economics and business – the wealth in money and assets used to drive economic growth and business activities.



Capital refers to the accumulation of wealth, typically held in the form of money or property, which is owned and utilized by individuals, organizations, or businesses to generate income, fuel economic activities, and create value. Capital serves as a critical resource in modern economies, facilitating investment, production, and growth. It can be divided into various forms, including financial capital (money, stocks, bonds), physical capital (machinery, buildings), and human capital (skills, knowledge).


In the context of businesses, capital is an essential component for funding operations, expansion, and innovation. It plays a fundamental role in determining a company’s success and competitiveness. Capital management and allocation strategies are of great importance in business decision-making.


Understanding the diverse forms and functions of capital is vital for economists, entrepreneurs, and policymakers as they seek to foster economic development and prosperity.


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