Definitions (3)
Related Terms
1. Wealth in the form of money or assets, taken as a sign of the financial strength of an individual, organization, or nation, and assumed to be available for development or investment.
2. Accounting: Money invested in a business to generate income.
3. Economics: Factors of production that are used to create goods or services and are not themselves in the process.

Use 'capital' in a Sentence

He was trying to raise enough capital for his start-up business so that he could start producing widgets by July of this year.
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I have invested all of my capital in long term investments, hoping to make my retirement funds more secure.
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The small business owner needed to find an investment firm that was willing to give him the needed capital to rent the building he wanted to put his business in.
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Notable Quotable

Incremental Earnings with Incremental Investments
"In judging whether managers should retain earnings, shareholders should not simply compare total incremental earnings in recent years to total incremental capital because that relationship may be distorted by what is going on in a core business. During an inflationary period, companies with a core business characterized by extraordinary economics can use small amounts of incremental capital in that business at very high rates of return. But, unless they are experiencing tremendous unit growth, outstanding businesses by definition generate large amounts of excess cash. If a company sinks most of this money in other businesses that earn low returns, the company's overall return on retained capital may nevertheless appear excellent because of the extraordinary returns being earned by the portion of earnings incrementally invested in the core business. The situation is analogous to a Pro-Am golf event: even if all of the amateurs are hopeless duffers, the team's best-ball score will be respectable because of the dominating skills of the professional."
- Warren Buffett