In economics, the definition of capital is not specific. Strictly speaking, capital is an accounting abstraction: they are assets and rights (asset elements of assets) minus debts and obligations (liabilities), of which the capitalist is the owner. Thus, it is said that a company is capitalized, or capital is increased when its assets increase, or its liabilities decrease, or new members’ contributions are incorporated, or the indebtedness with third parties is reduced. When the liability is greater than the asset, it is said that the economic unit is in a situation of negative equity. However, under the vulgar approach, capital is understood as a mere material component of production, basically constituted by machinery and facilities, which, in combination with other factors, such as labor, raw materials, and intermediate goods, allows the creation of goods of consumption.
The business capital refers to the financial assets necessary for a company to produce the goods and/or services offered to its customers. Capital is necessary for a company to maintain its operations.
Usually, business capital comes in the form of capital or debt. Some companies sell shares, that is, a part of the company’s property, in exchange for a financial investment. Others obtain capital by borrowing through commercial loans and other credit modalities which the company must pay in the future generally, with interest.
While commercial capital includes tangible elements, such as assets held by the company, including cash in the bank, real estate, inventory and equipment, the definition is adaptable and can be applied to anything that can generate wealth for the company, including things like patents, brand names, and business accounting books. Basically, business capital is anything the company can sell to make money if necessary. In the world of accounting, commercial capital refers strictly to the value of the business according to its balance sheet. However, in terms of commercialization, short term loans Brisbane extends to the public perception of the brand and other related intangibles such as goodwill.
Modern concepts establish the existence of several types of business capital:
• Human capital. It consists of the sum of knowledge, skills, and training that individuals have acquired and that enables them to perform productive tasks of different levels of specialization and complexity.
• Fixed Capital. Equivalent to the goods that, in a certain company, are part of the production process. These goods are not consumed, at least in the short term, and are, for example, machinery, buildings, installations, real estate.
• Working capital. it is the capital that is consumed throughout the production process, so it must be replaced in the short term.
• Issued capital. It consists of a set of actions that a company puts into circulation for sale.
• Social capital. It is the net contribution that a partner or person makes to a company, either at the moment of creating it or, when created after entering a new partner or investor to the company. The social capital is just a part or component of the patrimony, the latter being the wealth of a company or person.