Editing Financial capital (section)

== IFRS concepts of capital maintenance ==
''Financial capital'' generally refers to saved-up financial [[Wealth (economics)|wealth]], especially that used in order to start or maintain a business. A financial concept of capital is adopted by most entities in preparing their [[financial reports]]. Under a financial concept of capital, such as ''invested money'' or ''invested purchasing power'', capital is synonymous with the [[net assets]] or [[Net equity|equity]] of the entity. Under a physical concept of capital, such as operating capability, capital is regarded as the [[productive capacity]] of the entity based on, for example, units of output per day.

'''Financial capital maintenance''' can be measured in either nominal monetary units or units of constant purchasing power.<ref name="Constantitem">[[Constant item purchasing power accounting#CIPPA as per the IASB's Framework.5B14.5D .5B15.5D]] Constant item purchasing power accounting</ref> Accordingly, there are three concepts of capital maintenance in terms of [[International Financial Reporting Standards]] (IFRS):<ref name="Constantitem" />

# Physical capital maintenance;
# Financial capital maintenance in nominal monetary units; and
# Financial capital maintenance in units of constant purchasing power.

Financial capital is provided by lenders for a price: [[interest]]. Also see [[time value of money]] for a more detailed description of how financial capital may be analyzed. Furthermore, financial capital, is any liquid medium or mechanism that represents [[wealth]], or other styles of [[capital (economics)|capital]]. It is, however, usually purchasing power in the form of money available for the production or purchasing of goods, etcetera. Capital can also be obtained by producing more than what is immediately required and saving the surplus.

Financial capital can also be in the form of purchasable items such as computers or books that can contribute directly or indirectly to obtaining various other types of capital.<ref>Spillane, James P., Tim Hallett, and John B. Diamond. 2003. "[https://web.archive.org/web/20120915110800/http://www.distributedleadership.org/DLS/Publications_files/Spillane,%20Hallett,%20Diamond.%20Forms%20of%20capital%20and%20the%20construction%20of%20leadership-%20Instructional%20leadership%20in%20urban%20elementary%20schools.pdf Forms of Capital and the Construction of Leadership: Instructional Leadership in Urban Elementary Schools]." ''[[Sociology of Education (journal)|Sociology of Education]]'' 76(1):1–17. {{JSTOR|3090258}}.</ref><ref>Spillane, James P., Tim Hallett, and John B. Diamond. 2003. "Forms of Capital and the Construction of Leadership: Instructional Leadership in Urban Elementary Schools." Sociology of Education 76 (January): 1-17 {{verify source |date=November 2020 |reason=This ref was deleted Special:Diff/965734946 by a bug in VisualEditor and later restored by a bot from the original cite located at Special:Permalink/964348380 cite #3 - verify the cite is accurate and delete this template. [[User:GreenC_bot/Job_18]]}}</ref><ref>The Risk Report, April 2009. Volume XXXI No. 8. [http://www.irmi.com/ IRMI] {{webarchive|url=https://web.archive.org/web/20090410004043/http://www.irmi.com/ |date=2009-04-10 }}. {{verify source |date=September 2019 |reason=This ref was deleted Special:Diff/903130420 by a bug in VisualEditor and later restored by a bot from the original cite located at Special:Permalink/890802002 cite #4 - verify the cite is accurate and delete this template. [[User:GreenC_bot/Job_18]]}}</ref> Financial capital has been subcategorized by some academics as [[real capital|economic]] or "[[productive capital]]" necessary for operations, [[Signalling (economics)|signaling]] capital which signals a company's financial strength to shareholders, and regulatory capital which fulfills [[capital requirement]]s.<ref>The Risk Report, April 2009. Volume XXXI No. 8. [http://www.irmi.com/ IRMI] {{webarchive|url=https://web.archive.org/web/20090410004043/http://www.irmi.com/ |date=2009-04-10 }}.</ref>