Capital in a business context includes three main categories; financial, human and natural.
Financial capital
Financial capital includes debt and equity. Debt is a loan or financial obligation a company makes to fund operations and generate more revenue. This debt incurs interest that a company repays through regular payments over time.
Equity is the ownership or your stake in a company. Equity investors receive the residual value of a company when it’s sold or shut down.
Human capital
Human capital is essentially a company’s workforce. Companies use human capital to create products and services that generate revenue, but this doesn’t mean a company owns people. Instead, a company employs people, or human ‘assets’, with intellect, skills and talents.
Human intellect refers to the intelligence of a company’s employees and their ability to solve problems, form strategies and think creatively, all of which can help the company outperform its competitors. Similarly, the skills and talents of individuals benefit a company’s growth.
Natural capital
Natural capital is the resources a company uses to operate and increase its value over time. These resources can include water, wind, solar, trees, plants and any other resource that helps a company generate income and increase production. However, many companies don’t have natural capital as it isn’t necessary in running every business.
