Definition: Cash that’s available to invest in operations, especially cash that came from owners.
Example: Some people use the term “capital” to refer to cash from any source (e.g. borrowings, owner’s investment in the company, cash from operations). Others use the term “capital” to mean only cash the company received from owners.
Why It’s Important: Capital is one of the required ingredients for business success. Capital is the funding needed to start the company, and for ongoing operations and investment.Many great ideas are never achieved due to insufficient capital. Plans for acquiring and maintaining capital are crucial to the success of a business.