Editing Financial capital (section)

==Types of capital==
===Fixed capital===
Fixed capital is money firms use to purchase assets that will remain permanently in the business and help it make a profit. Factors determining fixed capital requirements:
* Nature of business
* Size of business
* [[Organizational life cycle|Stage of development]]
* Capital invested by the owners
* location of that area

===Working capital===
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Firms use working capital to run their business. For example, money that they use to buy stock, pay expenses and finance credit. Factors determining working capital requirements:
* Size of business
* Stage of development
* Time of production
* Rate of stock turnover ratio
* Buying and selling terms
* Seasonal consumption
* Seasonal product
*profit level
*growth and expansion
*production cycle
*general nature of business
*business cycle
*business policies
*Debt ratio

===Own and borrowed capital===
Capital contributed by the owner or entrepreneur of a business, and obtained, for example, by means of savings or inheritance, is known as own capital or [[Equity (finance)|equity]], whereas that which is granted by another person or institution via debt instruments is called borrowed capital, and this must usually be paid back with interest. The ratio between debt and equity is named [[Leverage (finance)|leverage]]. It has to be optimized as a high leverage can bring a higher profit but create [[solvency]] risk.

'''Borrowed capital''' is capital that the business borrows from institutions or people, and includes debentures:
*[[Callable bond|Redeemable debenture]]s
*[[Irredeemable debentures]]<!-- WAIT--WAIT! Before you remove the brackets, consider writing a new article! -- Paine -->
* Debentures to bearer
* Ordinary [[debenture]]s
* bonds
* deposits
*loans

'''Own capital''' is private capital that owners of a business (shareholders and partners, for example) provide, sometimes called owners equity. The ownership interest is typically represented in [[Preferred stock|preferred]] [[Share (finance)|shares]], and may be of various types, for example:
* Preference shares/hybrid source of finance
** Ordinary preference shares
** Cumulative preference shares
** Participating preference shares
* Ordinary shares
* Bonus shares
* Founders' shares

These typically have preference over the [[Common stock|common share]]s. This means the payments made to the shareholders are first paid to the preference shareholder(s) and then to the equity shareholders.