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Forex Glossary

Capital

In a fundamental sense, capital consists of anything that can enhance a person's power to perform economically useful work. Its specific definition depends, however, on the context in which it is used. In a broad sense, it can be considered as a measure of wealth owned by an individual, firm, or nation, or it can be referred as financial strength. This strength is created by sacrificing present consumption and exploiting land or labor for the production of more future wealth.

In this context, capital can be seen as an instrument, including assets such as buildings, machines, equipment, and roads, while circulating capital consists of more short-lived factors of production such as food or fuel.

More specific types of capital include financial - or the financial value of assets such as cash-, natural, infrastructural, and human capital.

In accounting and finance, capital is referred as one's own or borrowed money invested in a business to generate income.


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