Capital definition – find out what are types of capital

Let’s start with this that capital is a term that encompasses many concepts an in this article you will be able to find out various types of capital. Those types of capital are valuable resources, goods and also services that optimize the functionality of society. Keep reading and find out what are different types of capital.

What is capital?

We should start this article with explaining what capital is. So capital is in fact any asset which generates and also increases productivity, increases the value of the product or service and also it provides a strategic adventage to a specific group. You should also know that capital includes:

• skills,
• goods,
• services.

What are the types of capital?

That is right, there are different types of capital and here is the place where you will find out all of those types. Here is a list of different types of capital:

• financial capital,
• economic capital,
• manufactured capital,
• human capital,
• social capital,
• intellectual capital,
• cultural capital,
• experiential capital,
• natural capital,
• debt capital,
• equity capital,
• trading capital.

Financial capital

Financial capital is the financial assets or economic resources a business. You should also know that financial capital is measured in terms of currency or money but also companies can readily sell or exchange it but only if there is non outstanding financial obligations. What sources financial capital includes? Well yes, we should also mention this one. So those includes:

• profits,
• initial public offering,
• loans,
• bonds,
• corporate stock,
• partnership.

Economic capital

Economic capital is in fact the amount of capital that a company have to ave to survive any kind of risks that it is probably going to take. You should be careful not to confuse with regulatory/requirement capital.

Manufactured capital

Manufactured capital means material goods and infrastructure owned or leased. Here goes the types of manufactured capital:

• buildings,
• technology,
• transportation,
• tools,
• cultivated ecosystems,
• machinery,
• communication devices.

Human capital

Human capital means for example the people that are working to produce goods and all services. This capital means skills, potential and capabilities that a person accumulate throughout their life. Examples of human capital includes:

• education,
• knowlage,
• training,
• creativity,
• physical health,
• problem solving,
• mental and emotional well-being.

Social capital

This kind of capital is resourses that is being gained through interpersonal relationship and all social networks. This capital means two categories which are bonding social capital and briding social capital.

Intellectual capital

Capital which is intellectual capital means information, competency, expertise a person has and knowledge. This capital depends on this how your specific knowledge base adds value and also provides advantages within a certain context.

Cultural capital

Cultural capital is in fact collection of material goods, social assets and experiances. Here goes the examples of cultural capital:

• stories,
• histories,
• education,
• clothing,
• languages,
• books, music, art (all kind of cultural goods).

Experiential capital

Experiential capital is in fact the knowlage that you gain through your experiences through your life. It is acquires by:

• working on projects,
• learning new skills,
• going for new ideas,
• traveling,
• building something.

It aso helps people in strategic thinking what sounds great, right?

Natural capital

Natural capital refers to the world’s stocks of natural assets which simply means:

• geology,
• air,
• minerals,
• soil,
• water,
• animals.

This capital includes ecosystem processes like a climate regulation.

Debt capital

Debt capital is offset by a debt liability on the balance sheet. This capital simply is borrowed money. It has to be paid off an a regular basis with interest.

Equity capital

This kind of capital is raised by issuing stock and securties. It is funds paid into a business by investors in exchange of common/preferred stock.

Trading capital

This kind of capital is the amount of money allottedto an individuak to buy and sell various securities. This is also a term which is being used by brokerages and other financial institutions that place a huge number of trades daily.

Facts

There are many facts about which all people should be aware of. Here goes the list of those facts:

• capital assets can be found on current or long-term portion of the balance sheet, these assets may include marketable securities, cash or cash equivalents,
• equity financing means the sale of stock shares, provides cash capital which is also reported in the equality portion of the balanced sheet,
• you should be also aware of this that many companies are using combination of methods to raise capital and finance operations as well,
• when it comes to trading capital it is being indentified as a fourth component in a business in the financial industry,
• constructed capital is tangible assets that result from human innovation and skills as well,
• four major types of capital are working capital, debt capital, equality capital and trading capital,
• manufactured capital refers to the made by human stock of material objects or systems.

Conclusion

This article is absolutely essential for any business owner so they could have their business running in the right way. We hope that this made you realise a lot of needed things to be a good business owner thanks to this article. Do you feel more prepared now, when you know all of the types?