What does "capital" refer to in business terms?

In business terms, "capital" refers to the assets owned by a business that are utilized in generating profit. This includes physical assets such as machinery, buildings, and equipment, as well as intangible assets like intellectual property. These assets are essential for the operation of the business and help produce goods or services that can be sold for revenue.

The distinction is important because capital is a critical component of a company’s overall financial health, influencing its ability to invest in growth opportunities, manage ongoing operations, and respond to market demands. Recognizing the role of capital in business operations is vital for evaluating a company's financial position and its potential for future profitability.