What Is Capital? Meaning, Features Together With Types Of Capital

What is Capital? Meaning

Different subjects similar Book-keeping, arrangement of commerce (O.C) in addition to secretarial exercise (S.P) inward commerce, economics, etc., holler for unlike pregnant of the term Capital.

business.

In commerce subjects similar O.C in addition to S.P, upper-case missive of the alphabet way finance or company's capital.

But, inward economics, upper-case missive of the alphabet is that purpose of wealth which is used for production.

But hither consider pregnant of term upper-case missive of the alphabet from economical dot of view.

Relations of Capital

The give-and-take Capital is related amongst the next iii terms, viz.,

Wealth,
Money, and
Income.

The relation of upper-case missive of the alphabet amongst wealth, coin in addition to income is explained below:-

1. Relation amongst Wealth:-

Capital is that purpose of wealth which is used for production. So, wealth is a wide concept in addition to upper-case missive of the alphabet is a narrowed concept.

Relation of Capital in addition to Wealth is explained amongst the assistance of next picture.

investment of money inward business. But inward economic science coin becomes upper-case missive of the alphabet solely when it is used to purchase existent upper-case missive of the alphabet goods similar plant, machinery, etc. When coin is used to purchase upper-case missive of the alphabet goods, it becomes Money Capital. Please reckon the motion painting given above.

But coin inward the hands of consumers to purchase consumer goods or coin hoarded doesn't constitute capital. Money past times itself is non a component of production, precisely when it acquires stock of existent upper-case missive of the alphabet goods, it becomes a component of production. For production nosotros postulate existent upper-case missive of the alphabet in addition to coin upper-case missive of the alphabet precisely coin upper-case missive of the alphabet acquires existent capital.

3. Relation amongst Income:-

Capital generates income. So, upper-case missive of the alphabet is a beginning in addition to income is a result. E.g. fridge is a upper-case missive of the alphabet for a ice-cream parlour owner. But, profits which he gets out of his trouble concern is his income.

So, Capital is a FUND concept in addition to Income is a FLOW concept.

Features of Capital

The characteristics or features of upper-case missive of the alphabet are:-

Man-made Factor : Capital is non a gift of nature. So it is non a main or natural factor, it is made past times homo inward upper-case missive of the alphabet goods industry. It is secondary every bit good every bit an artificial component of production.
Productive Factor : Capital helps inward increasing grade of productivity in addition to speed of production.
Elastic Supply : Supply of upper-case missive of the alphabet depends upon upper-case missive of the alphabet formation process. Capital formation depends upon savings in addition to investment. By accelerating upper-case missive of the alphabet formation, upper-case missive of the alphabet render tin live increased. But it is a long term process.
Durable : Capital is non perishable similar labour. It has a long life dependent acre to periodical depreciation.
Easy Mobility : Movement of upper-case missive of the alphabet from i house to to a greater extent than or less other is easily possible.
Is a Wealth : Since upper-case missive of the alphabet has all features of wealth viz. utility, scarcity, transferability in addition to externality, upper-case missive of the alphabet is a wealth precisely wealth doesn't necessarily move capital.
Derived demand : As a component of production, upper-case missive of the alphabet has a derived need to create finished goods which select a direct demand. e.g. need for raw cotton fiber is derived from need for cotton fiber cloth.
Round most production : Capital goods doesn't satisfy our wants directly. But resources should live diverted towards production of upper-case missive of the alphabet goods first. And thereafter such produced hateful tin live used to create consumer goods having direct demand.
Social Cost : Resources select option uses. Either they tin live lay to production of upper-case missive of the alphabet goods or consumer goods. When resources are used for producing upper-case missive of the alphabet goods, it way guild has sacrificed enjoyment of consumer goods. This is called social cost.

Types of Capital

The forms, classification or types of upper-case missive of the alphabet are:-

Fixed capital : It refers to durable upper-case missive of the alphabet goods which are used inward production i time again in addition to i time again till they vesture out. Machinery, tools, way of transport, manufacturing works life building, etc are fixed capital. Fixed upper-case missive of the alphabet does non hateful fixed inward location. Since the coin invested inward such upper-case missive of the alphabet goods is fixed for a long period, it is called Fixed Capital.
Working capital : Working upper-case missive of the alphabet or variable upper-case missive of the alphabet is referred to the unmarried utilisation produced goods similar raw materials. They are used straight in addition to solely i time inward production. They larn converted into finished goods. Money pass on them is fully recovered when goods made out of them are sold inward the market.
Circulating capital : It is referred to the coin upper-case missive of the alphabet used inward purchasing raw materials. Usually the term working upper-case missive of the alphabet in addition to circulating upper-case missive of the alphabet are used synonymously.
Sunk capital : Capital goods which select solely a specific utilisation inward producing a detail commodity are called Sunk capital. E.g. Influenza A virus subtype H5N1 textile weaving machine tin live used solely inward textile mill. It cannot live used elsewhere. It is sunk capital.
Floating capital : Capital goods which are capable of having to a greater extent than or less option uses are called floating capital. For e.g. electricity, fuel, carry vehicles, etc are the floating upper-case missive of the alphabet which tin live used anywhere.
Money capital : Money upper-case missive of the alphabet way the coin funds available amongst the company for purchasing diverse types of upper-case missive of the alphabet goods, raw stuff or for structure of manufacturing works life building, etc. it is also called liquid capital. At the starting fourth dimension the coin upper-case missive of the alphabet is required for 2 purposes i for acquiring fixed assets i.e. fixed upper-case missive of the alphabet goods in addition to to a greater extent than or less other for purchasing raw materials, payment of payoff in addition to coming together sure as shooting electrical current expenses i.e. working capital.
Real capital : On the other hand, existent upper-case missive of the alphabet is referred to the upper-case missive of the alphabet goods other than coin such every bit machinery, manufacturing works life buildings, semi-finished goods, raw materials, carry equipments, etc.
Private capital : All the physical assets (other than land), every bit good every bit investments, which select income to an private are called private capital.
Social capital : All the assets owned past times a community every bit a whole inward the shape of non-commercial assets are called social upper-case missive of the alphabet e.g. roads, world parks, hospitals, etc.
National capital : Capital owned past times the whole land is called national capital. It comprises private every bit good every bit world capital. National upper-case missive of the alphabet is that purpose of national wealth which is employed inward the reproduction of additional wealth.
International capital : Assets owned past times international organizations similar UN, WTO, World Bank, etc., constitutes an International Capital.