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Capital Requirements for Businesses

What is meant by capital requirements for the business? Why do all businesses need be concerned about capital? Explain the different types of capital? Do they interact? Why or why not.

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Capital requirements of a business include all long and short term financial needs the business will incur in the present and in the future. Examples of capital requirements include short term concerns such as replenishing inventory each month, paying the utilities, paying employee salaries, and paying interest on long term debt. Examples of long term capital requirements include finances to expand plants and buildings and money to purchase a competitor in the ...

Solution Summary

The solution explains capital requirements and why companies should be concerned with them. Also, the different types of capital are explained.