Definition of Capital
Capital means the financial value of assets or the financial assets, like deposit account held funds, also the tangible production equipment and machinery used in manufacturing environments. Moreover, it comprises facilities like buildings used for storage and production of manufactured goods. It excludes materials and items consumed and used during manufacturing.
Brief Explanation of Capital
The purpose of investment is to produce wealth, whereas money is used to acquire goods and services for consumption. Its examples are patents, automobiles, brand names, and software. Each of these items has the potential to create wealth. You can land it for a monthly or annual fee to generate wealth in addition to using it for production or sell it when you are not using it.
To create wealth, the goods must provide ongoing service to the business. Creating value requires combining skills and time with money and the efforts of individuals. By forgoing current consumption and investing in it, an individual or business can forward those efforts towards future prosperity.