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.
