1. equity interest of the owner in the business that is the difference between asset and liability , also called equity or net worth . In a corporation, capital represents the stockholders' equity. Capital stock consists of common stock and preferred stock.
2. goods purchased for use in production.
3. working capital , which is the difference between current assets and current liabilities.
4. long-term assets that are not bought and sold in the ordinary course of business. The term usually refers to fixed asset such as machinery, equipment, building, and land.

1. Banking. Measure of financial strength; funds invested in a bank, including common stock and qualifying preferred stock , mandatory convertible securities, such as capital note , plus retained earnings. Equity capital is the initial funding (called contributed capital or paid-in capital ) needed to charter a bank, a cushion against operating losses, such as bad debt , and a source of protection for depositors' money.In 1989, banking regulatory agencies revised the capital standards for banking institutions after the Financial Institutions Reform, Recovery and Enforcement Act required savings and loan associations to meet the same standards for capitaladequacy as national banks. Under the revised guidelines, there are two broad requirements: a minimum level of capital called core capitalequal to 3% of total assets, and a risk-based capital ratio equal to 8% of risk-adjusted assets, after December 31, 1992. Banking institutions are required to meet the higher of the two ratios in determining their capital adequacy, as defined by banking regulations. Under the Risk-Based Capital guidelines, bank assets are classified by risk (because they represent loans and investment of funds), and capital requirements are determined from the risks assigned to each asset category. Thus, an asset defined as eding 100% of capital would require 100% of the prevailing 8% risk-based capital requirement. In other words, for every $100 in loans and investments, a bank would need, on average, $8 in capital coverage. See also capital ratio ; total capital .
2. Finance. Owner's share in a business plus operating profit or surplus, financing its long-term growth. Also called contributed capital or owner's equity. See also net worth : paid-in capital .

Finance: money and other property of a corporation or other enterprise used in transacting its business.
Economics: factories, machines, and other human-made inputs into the production process.

equity of shareholders of a stock insurance company. The company's capital and surplus are measured by the difference between its assets minus its liabilities. This value protects the interests of the company's policyowners in the event it develops financial problems; the policyowners' benefits are thus protected by the insurance company's capital. Shareholders' interest is second to that of policyowners.

1. a sum of money used to purchase long-term assets.
   Example: With $100,000 capital received from the sale of his home, Carl bought a tractor to use on his farm.

2. stocks, bonds, or mortgages that were sold to raise money to purchase assets, as well as retained earnings.
   Example: The corporation's capital included $1 million of bonds, $2 million in capital stock, and $1.5 million of retained earnings.

3. assets, other than land, used to generate income.
   Example: In economic terms, the productivity of labor is increased through the application of capital such as tools, machinery, and buildings.