Capital is financial assets available for investment or business operations. It is the money a company uses to buy equipment, hire workers, and expand. It is also the money an investor puts into a venture expecting a return. Capital can be cash, machinery, buildings, or intellectual property. The form matters less than the function: it is the fuel for economic activity.

Businesses raise capital in two main ways. Debt capital comes from loans and bonds. The company must repay it with interest. Equity capital comes from selling shares. The company gives up ownership but does not owe repayment. Each has trade-offs. Debt is cheaper if the company is profitable but riskier if cash flow falters. Equity dilutes control but shares the risk. Most companies use a mix.

Capital is not free. It has a cost. Lenders charge interest. Shareholders expect returns. A company that earns less than its cost of capital destroys value, even if it reports a profit. That insight drives decisions about which projects to fund and which to abandon. Capital allocation is one of the most important jobs in any business. Getting it wrong is expensive. Getting it right compounds over decades.

Common types

• Debt capital
• Equity capital
• Working capital
• Venture capital
• Human and intellectual capital