WHAT ARE THE TYPES OF CAPITAL?

Meaning: -In ordinary sense the term ‘capital’ means ‘money’. But in economics, the term ‘capital/ refers to that part of wealth which is used for further production of wealth. Therefore, all capital is wealth but all wealth is not capital. Capital is man made factor of production. Capital is also called as produced factor of production. Therefore, materials machineries, tools and equipments, vehicles and building represent capital.




Definition: -“Capital consists of those kinds of wealth, other than free gifts of nature, which yield income.”
Defined by................................... (Alfred Marshall)

Types of capital are


Ø  On the Basis of Durability
1.      Fixed capital: -The fixed capital is that capital which is durable in nature. It can be put to use for a number of times, until there is wear and tear. Examples of such capital include machines, tools, equipments, etc.

2.      Working Capital: -It is also called as variable capital. It can be used only one time. It cannot be put to use for a number of times. Examples of such capital include raw materials, coal, fuel, power, lubricants, etc.


Ø  On the basis of Mobility:
3.      Sunk Capital: -It refers to that capital which is used for some specific purpose. It has no alternative use. It performs a particular task for a particular activity. Examples; Road Roller it can be used only for levelling the road.

4.      Floating Capital: -It is that capital, which can be used for several alternative uses. They are non-specific capital items. Examples; includes electricity, petrol, coal, money, etc...


Ø  On the basis of nature:
5.      Physical Capital: -It is that capital which is used for the production of other goods and services. It is a stock of produced goods that facilitates further production of other goods. Examples of such goods include machines, tools, etc.
6.      Financial Capital: -It is that capital which is available for investment. It is the stock of money. Financial capital directly cannot produce foods and services. But it can be sued for purchase of production, which can produce goods and services.


Ø  On the basis of Ownership:
7.      Personal Capital: -It is that capital which is owned by individuals. It is also called as private capital.

8.      Social Capital: -It is that capital which is owned by the society or public. Government or public assets such as Government etc. are examples of social capital.

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