donwloadimg

Download App

Log in to access Online Inquiry

What Is Capital?

Views 25352022.08.03

https://courseimg.futunn.com/20220630000003541225e51cf43.jpg

Key takeaways

  • Capital refers to assets used by a company to create goods and services.

  • Capital is important for company growth and wealth creation.

Understanding capital

Capital is a broad term, but generally refers to the assets that a company uses to provide goods and services. A company's capital might include land, equipment, patents and other productive resources.

Capital is important because it is necessary for company operation and growth. Companies can employ their capital to produce products, generate income, and create wealth for investors.

Businesses will focus on three types of capital: Debt Capital,Equity Capital and Working Capital. Working capital refers to the capital needed for a company's daily operation. A firm couldn't stay in business if it doesn't have sufficient working capital.

In order to maintain solvency or expand production, a company can fund its business by selling shares to investors or obtaining loans from financial institutions. The capital obtained from investors is called equity capital, and the other is called debt capital.

Example

Imagine you're about to open a moomoo coffee shop. In order to supply coffee, you need to have retail space, equipment (espresso machines, industrial coffee roasters, tables and chairs) and ingredients. In addition, you also need a barista to serve customers drinks.

In this case, the store's capital might include retail space, equipment and ingredients. You coffee shop can't run without capital, let alone sell coffee to customers to generate income.

Trade like a pro with moomoo

Get free stock and start your professional trading today

Terms and conditions apply right-arrow
This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal.Moomoo is a financial information and trading app offered by Moomoo Techonologies Inc.In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. ("Moomoo Financial SG") regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial SG is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites https://www.futuau.com and https://www.moomoo.com/au. Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.
Expand

Recommended