Types Of Capital

By Anonymous -

Today We're talking about types of capital 

First, We'll  understand what is a capital.


What is Capital?

Generally capital is the life of the business. everything which gives benefit or output to a producer / person is called as capital. it may be factory, machinery, buildings etc. even money is also considered as capital.

So, everything which is used/invested  to produce is considered as capital. Capital plays a vital role in managing regular activities of business.


Households are the main sources for capital formation. a countries real growth is based on its Output produced.

Economists strongly believe, Capital is the key to run whether a family, small enterprises, companies or MNC's etc.


Types Of Capital

  • Fixed Capital: It is the expenditure which is incurred on machinery, buildings, assets etc. they remain in the organization for long time or at least for more than a financial year. these include only physical assets.
  • Variable Capital: The expenditure incurred on purchasing raw materials, Daily wages is called as variable capital. 
  • Tangible Capital: It refers to the capital which can be touched and feel is called as tangible capital. for example, machinery, buildings and all kind of physical assets.
  • Intangible Capital: which cannot be touch and feel is called as intangible capital. example, Copyrights, goodwill of a company, software's, etc.
  • Real Capital: It is also called as Economic Capital. It refers to physical's such as machinery, Goods, buildings etc. 
  • Human Capital: the capital which is used to promote human skills and knowledge is called as human capital. 
  • Individual Capital: It is related to a single person. for example, purchase of land , buildings and property for a person.
  • Social Capital: it is related to society. for example, construction of dams, roads, other facilities is called as social capital. they promote effective functioning of the society.

Conclusion

The rate of development of a country is based on capital formation. Households are the main sources to generate capital formation.
however, capital is very important to run a family, business, society effectively.
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The end

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