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Financial Capital

  • Reference work entry
  • First Online:
Encyclopedia of Quality of Life and Well-Being Research

  • 8 Accesses

Synonyms

Equity capital

Definition

These are funds used to finance a firm, including both equity capital and debt (Lipsey 1993). The funds are invested in a company in order to acquire assets. Financial capital contributes to the wealth of the individuals or companies.

Description

To understand the financial capital of a company, it is important to know the structure of funds which means the way in which the assets (current and fixed) are financed by the shareholders’ funds and the outside liabilities (International Labour Office 1985).

Shareholders’ funds are the money employed in a company that has been contributed by individuals and institutions to finance a company in return for ordinary shares and preference shares and which will remain as a permanent source of finance as long as the company remains in existence (Pass et al. 1991).

Outside liabilities are money employed in a company that has been borrowed from external sources for fixed periods of time.

The optimal financial...

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References

  • Galbraith, J. K. (1979). The nature of mass poverty. Harmondsworth: Penguin Books.

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  • International Labour Office. (1985). How to read a balance sheet (2nd rev. Ed.). Geneva: Author.

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  • Lipsey, R. (1993). An introduction to positive economics (7th ed.). Oxford: Oxford University Press.

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  • Pass, C., Lowes, B., Pendleton, A., & Chadwick, L. (1991). Dictionary of business. Glasgow: Harper Collins.

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  • Ross, S., Westerfield, R., & Jordan, B. (1993). Fundamentals of corporate finance (2nd ed., International Student Edition). Homewood: Richard D. Irwin.

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Author information

Authors and Affiliations

  1. Department of Economics, University of Peloponnese, Tripolis, Greece

    Panagiotis Evangelopoulos & Spyridon Repousis

Authors
  1. Panagiotis Evangelopoulos
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  2. Spyridon Repousis
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Corresponding author

Correspondence to Panagiotis Evangelopoulos .

Editor information

Editors and Affiliations

  1. Dipartimento di Scienze Statistiche, Sapienza Università di Roma, Roma, Roma, Italy

    Filomena Maggino

Section Editor information

  1. Department of Economics, University of Genoa, Genoa, Italy

    Matteo Corsi

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Evangelopoulos, P., Repousis, S. (2023). Financial Capital. In: Maggino, F. (eds) Encyclopedia of Quality of Life and Well-Being Research. Springer, Cham. https://doi.org/10.1007/978-3-031-17299-1_1044

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