What does capital refer to in a business context?

In a business context, capital primarily refers to the financial resources required to fund operations, invest in projects, or purchase assets. This includes cash or funds available that can be utilized for various purposes such as starting a new project, expanding operations, or enhancing productivity.

Capital is crucial as it enables a business to pursue growth opportunities and ensures that it can meet financial obligations. Investing capital wisely can lead to increased revenue and overall business success. This distinguishes capital from other elements of a business such as liabilities, which are obligations or debts; physical assets, which refer to tangible items needed for operations; and salaries, which represent operational expenses rather than the initial funding or investment capital required for growth.