What is Capital ?
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 the manufactured good. Materials and items consumed and used during the process of manufacturing do not qualify to be included in it.
Brief Explanation of Capital
It is used and is more durable to produce wealth through investment while money is used simply to acquire services and goods for consumption. Its examples are patents, automobiles, brand names and software. Wealth can be created through use of all of these items. It can be landed for an annual or monthly fee to generate wealth besides being used for production or can also be sold when not required.
Ongoing service must be required from the goods to the business for creation of wealth. To create value, it should be combined with money and the efforts of individuals who exchange their skills and time for money. By forgoing current consumption and investing in it, an individual or business can forward those efforts towards future prosperity.