What it is
Capital is any asset that can be used to create value. It includes money, equipment, intellectual property, natural resources, and labor that can help generate profit or other types of capital.
You’ve most likely heard about capital being used to refer to money, especially in the context of opening or running a business. However, this can be a broad term that covers tangible and intangible properties.
What it means for you
Both businesses and individuals need capital to cover daily expenses and possibly grow money for the future.
If you’re thinking of investing in a company, you can look at its recent balance sheets or other financial reports to find out how it generates, manages, and grows its capital. This can tell you how well a company uses its resources and whether it’s financially healthy.
It’s also crucial to know how to manage your personal capital. This could involve budgeting for your needs, wants, and savings as well as planning where to allocate the money you’ve earmarked for investments.
