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Financial capital refers to the funds provided by lenders (and
investors) to businesses to purchase real capital like equipment for
producing goods/services. Real capital may include shovels for
gravediggers, sewing machines for tailors, or machinery for
manufacturing firms. Financial capital is provided by lenders for a
price: interest. Also see time value of money for a more detailed
description of how financial capital may be analyzed.
Furthermore, financial capital, or economic capital, is any liquid
medium or mechanism that represents wealth, or other styles of
capital. It is, however, usually purchasing power in the form of
money available for the production or purchasing of goods, etcetera.
Capital can also be obtained by producing more than what is
immediately required and saving the surplus.
financial capital
Definition
Funds which are available to acquire real capital.
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