Working Capital

The term Capital is used with different meanings in the field of the economy and finance. In finance and accounting, Capital generally refers to financial wealth, mainly to that used to sustain a company. Initially, che assumes other types of Capital (physical Capital for example), they can be purchased with money or financial Capital, in a way that does not need a further analysis of the last.In this way, the word Capital is an abbreviation of real Capital or capital goods or means of production. The Capital is one of the three factors of production, while the others are Earth and I work, goods that have the following characteristics are capital: 1. Read additional details here: Novartis CEO. can be used in the production of other goods (is this feature that makes it a factor of produccion.2.) They are the work of man, unlike the Earth which refers to resources naturally available as geographic locations or minerales.3. Are not directly used in production processes, to difference of commodity raw materials or semi-elaborada.The third part of the definition has not been used fully by the classical economists. The classical economist per excellence, David Ricardo, would have used the preceding definition for the term fixed Capital, including raw materials and intermediates as part of its Working Capital.Karl Marx adds a distinction that is often confused with that of Ricardo. In Marxist theory, variable Capital refers to investment of the capitalist in the force’s work, view as the only source of value plus.

Given variable called is that the result of the value which can produce varies based on consumption. On the other hand, constant Capital refers to investment in non-human factors of production, such as machinery and other implants, which according to Marx, they contribute only with its value di substitution goods produced through your employment. Is constant in the result of employee value and also the remuneration obtained in the form of goods remains constant produced.Investment or Capital accumulation in classical economic theory is the Act of creating one higher in relation to the original Capital. To invest, the goods must be produced to be not accomplished immediately, they must be used to produce other goods as a means of production. The investment is closely related to the saving (although they are not the same thing). As Keynes felt, saving means don’t spend all entries in goods or services, while investment refers to spend in a specific type of goods, i.e. goods Capitales.El Austrian school Eugen Von Bohm-Bawerk Economist asserts that the Capital intensity is measured from the duration (roundaboutness) production process.

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