Financial Capital: A brief overview

Financial Capital: A brief overview

Financial Capital is the key factor in any organization whether public or private. The measurement of financial capital is always done in terms of money. However, very rarely some other intangible forms like goodwill and reputation can indirectly help in the form of financial capital as well. Nevertheless, financial capital can be conventionally defined as the monetary economic resource that is frequently used by businesspersons and entrepreneurs in order to purchase whatever they require. These requirements are directed towards building products or providing services to those areas of economic sector where they operate.
Financial capital is actually the wealth that has been generally saved in order to start-up a new venture or business. They are also used to maintain the integrity of any existing business. This concept of financial capital has been extensively used while preparing reports of any economic entity. The net asset or the entity’s equity is quite synonymous to the term of financial capital.
The sources of financial capital as per the needs are numerous. Broadly, they can be categorized in capital market and money market. The capital markets provide funds that are purchased and sold on long-term basis. The money markets are essentially those financial institutions that provide short-terms loans or savings. The key players in capital market are shares, debentures, mortgages, reserve funds, bonds and law firms. The money markets essentially include overdrafts, short-term loans, credits on account opening, exchanging bills, etc. Financial capital management is also an important part to keep balance amongst the flow of financial assets in any organization.

 

 

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