The monetary and non-monetary (though measured in monetary terms) sources of fund that are used by an entity to build, operate, or grow a business or a mission-oriented objective. Capital has different meanings in different contexts, however. In finance, capital consists of equity capital and debt capital.

Equity capital represents the portion of an entity’s equity that has been raised by the issue of shares of stock in the entity to shareholders, usually for monetary amounts (cash). In other words, it is the amount of capital that corresponds to the amount of money the owners have invested in the entity as mainly represented by common and/ or preferred shares. The equity capital of an entity may be increased by issuing (selling) new shares (new issue) or by the so-called bonus issue: transferring an entity’s own funds from unrestricted equity to equity capital.

Debt capital refers to is financed by borrowed funds (debt). It is a form of financing that allows an entity to raise funds by borrowing money from the public (e.g., creditors or investors). As a borrower or seeker of external sources of funds, an entity must repay the borrowed amount (the debt) along with interest over a specific period. Debt capital is a source of short- to long-term financing that a business taps into in order to finance its operations (usually for growth purposes).

In this sense, capital reflects the net worth (or book value) of an entity. Notwithstanding, capital can take many forms, but overall, it corresponds to the funds and other sources used by a business either to finance its assets in their multiple forms, to meet operational expenses, or to invest in new assets and projects.