Question

Financial capital, like money, is simply a tool. once financial capital is converted to economic capital (invested), it produces a resource that is:______

Answer 1

Financial capital, like money, is simply a tool. once financial capital is converted to economic capital (invested), it produces a resource that is Productive. Firms invest in their companies using financial capital.

Businesses employ capital to purchase additional machinery, structures, or materials, which they then use to produce things or offer services. Cash and investments can also be considered capital assets for a business. Its balance sheet includes a list of these assets.

The money cannot be used by managers to enhance dividends, cut prices, or grant themselves raises. They must put it to use in order to increase profits and assist the company make more gains in the future.

Debt is the first category. Companies obtain funding today, which they later remit with interest. Many business owners initially borrow money from family members or their credit cards. Once they establish a track record, they can apply for bank loans and Small Business Administration funding from the federal government. The company receives funds from investors in the form of equity, which is the second type of capital, in exchange for a future profit share. Specialty capital is the third category. It frequently serves as a means of purchasing time to increase revenue, for example, by postponing invoices.

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