Capital

Capital has a wide range of meanings, depending on the context.

For example, it may include financial resources, capital goods such as transport infrastructure, and human capital including knowledge, skills and relationships.

1. Financial reporting.

In financial accounting, capital is money the business owes the owner.

This is equal to assets minus liabilities (including debt).

In other words, the equity.

Equity capital funds the net assets of the business.

It also acts as a buffer to absorb losses or other deficits, to support the business to continue its operations following financial stress.

2. Corporate finance.

More broadly in the corporate finance context, 'capital' is the total amount of funding available for the operations of an organisation.

This includes both its debt and its equity.

3. Company law.

More narrowly in company law, 'capital' is the component of the total equity represented by the share capital of the company.

4. Regulation.

In the regulatory capital context, 'capital' means what the particular detailed regulations say that it means.

Here as elsewhere, care and consistency in definitions is essential.

Regulations and related supervision specify minimum mandatory amounts of capital, held for the protection of direct stakeholders and the wider community.

5. Economics.

'Capital' is one of the 'factors of production' in economics, the others classically being labour, land and enterprise.

In this context, 'capital' traditionally referred to the things that have been created to help in the production process, like machinery, factories and transport facilities. These things are sometimes known as 'capital goods'.

Human capital, natural capital and social capital are also fundamentally important parts of economic capital.

6. Individual capital.

The valuable and productive longer term resources available to an individual including their knowledge, skills, relationships, physical and financial resources.

7. Sustainability - Forum for the Future.

The Forum for the Future identifies five areas of capital in a model designed as a "framework for sustainability".

The five areas of capital in this model are:

• Human capital
• Social capital
• Manufactured capital
• Financial capital
• Natural capital

8. Integrated reporting - six capitals.

Other models and frameworks have additional categories of capital.

For example, the International Integrated Reporting Framework identifies intellectual capital as a separate form of capital.

This makes a total of six forms of capital in the integrated reporting framework.

In this framework, social capital is described as social and relationship capital.

See also

• Assets
• Book value
• Capital account
• Capital adequacy
• Capital allocation
• Capital allowances (tax)
• Capital and liquidity management
• Capital asset pricing model (CAPM)
• Capital buffer
• Capital charge
• Capital conservation
• Capital Conservation Buffer
• Capital control
• Capital deepening
• Capital duty
• Capital employed
• Capital expenditure (capex)
• Capital flight
• Capital free cash flow (CFCF)
• Capital Gains Tax (CGT)
• Capital gain
• Capital goods
• Capital instrument
• Capital intensity
• Capital lease
• Capital loss
• Capital maintenance
• Capital management
• Capital market
• Capital market swap
• Capital markets union
• Capital mobility
• Capital project
• Capital ratio
• Capital rationing
• Capital relief
• Capital Requirements Directive
• Capital risk
• Capital securities
• Capital structure
• Capital tax
• Capital to labour ratio
• Capitalisation
• Capitalism
• Catalytic capital
• Comprehensive Capital Analysis and Review (CCAR)
• Concessional capital
• Contingent capital
• Corporate finance
• Cost of capital
• Debt
• Debt capital
• Debt capital market (DCM)
• Digital capital market
• Economic capital
• Enterprise
• Equity
• Equity capital
• Equity capital market (ECM)
• Equity cost of capital
• Factors of production
• Finance
• Financial asset
• Financial capital
• Financial liability
• Financial markets
• Financial risk
• First loss capital
• Forum for the Future
• Funding
• Human capital
• Human capital management
• Hybrid capital
• Individual capital
• Individual Capital Guidance
• Insurance Capital Standard
• Intellectual capital
• Internal Capital Adequacy Assessment Process
• International capital market
• Interest
• Invested capital
• Investment bank
• Labour
• Land
• Liabilities
• Liquidity
• Loss absorbing capacity (LAC)
• Manufactured capital
• Market value
• Money
• Natural capital
• Natural capital accounting
• Optimal capital structure
• PISCES
• Primary Loss Absorbing Capital (PLAC)
• Primary market
• Produced capital
• Regulatory capital
• Relationship capital
• Return
• Return on capital
• Revenue
• Secondary Loss Absorbing Capital (SLAC)
• Secondary market
• Share capital
• Six capitals
• Social capital
• Three Pillars of Capital
• Total capital
• Total capital ratio
• Venture capital
• Weighted average cost of capital (WACC)
• Working capital
• Working capital management