Financial Capital Explained: Definition, Sources, and Differences

Financial capital refers to any economic resource measured in money, such as cash, credit or liquid assets. Businesses use it to fund operations, pay staff and invest in revenue-generating projects. There are three main ways to acquire financial capital: equity capital (funds from owners or shareholders), debt capital (borrowed money repaid with interest) and retained earnings (profits reinvested rather than distributed). Financial capital differs from real capital, which covers the physical assets—machinery, buildings, equipment—that are purchased and maintained using those financial resources.

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