Questions about Financial capital
Short answers, pulled from the story.
What is financial capital in economics and accounting?
Financial capital, also called capital or equity, is any economic resource measured in money that entrepreneurs and businesses use to buy what they need to make products or provide services, whether in the retail, corporate, or investment banking sectors.
How does financial capital differ from real capital?
Real capital consists of physical goods that assist production, such as shovels for gravediggers, sewing machines for tailors, or machinery and tooling for factories, while financial capital is the money used to acquire that equipment or the services needed to produce goods.
What are the three IFRS concepts of capital maintenance for financial capital?
Under International Financial Reporting Standards, the three concepts are financial capital measured in nominal monetary units, financial capital measured in units of constant purchasing power, and physical capital measured in physical units such as output per day.
What is the difference between shareholders and debenture-holders in financial capital?
Shareholders are effectively owners who may vote at Annual General Meetings and receive dividends only if there is a profit, while debenture-holders are creditors who receive a fixed rate of interest regardless of profit and are paid first if the firm dissolves.
What are the main sources of financial capital for a business?
Long-term sources, usually above 7 years, include share capital, mortgage loans, retained profit, venture capital, debentures, and project finance. Medium-term sources between 2 and 7 years include term loans, leasing, and hire purchase, and short-term sources under 2 years include bank overdrafts, trade credit, and factoring.
How does financial capitalism differ from industrial capitalism?
Financial capitalism produces profit from the manipulation of financial capital, whereas industrial capitalism produces profit from the manufacture of goods. Marxist theory treats finance capital's role as a determining and ruling class interest in capitalist society, particularly in its later stages.