Capital investment is the total, or sum of money provided
to a company to further its business objectives. The term also can refer to a
company’s acquisition of long-term assets such as real estate, manufacturing
plants, and machinery.
Capital investment is considered to be a very
important measure of the health of the economy. When businesses are making
capital investments it means they are confident in the future and intend to
grow their businesses by improving existing productive capacity. On the other
hand, recessions are normally associated with reductions in capital investment
by businesses.
Capital investment also can be understanding like
before we set up the business we must have capital, or modal to run the
business project. It can be formed in many ways such as making a loan from the
bank. Usually, every state has a zakat institution that has provide and help
its applicant with fund of zakat. Rather than make a loan from the bank
better take another institution than the bank.
Type of
Capital Investment
According
to John Spacey capital investments are spending that has long term value to a business.
This is often contrasted with the expenses that have a value to a business.
There are many types of capital investment, that we can make as capital for investment
and we can use it to make an investment. According to James Chen investment is the
purchase of goods that are not consumed today but are used in the future to
create wealth. So, from the meaning, the words of goods refer to types of
capital that we can use for the investment. There are many people who still lack
knowledge about the capital because they only think that the only kind of
capital is only money. Undeniable that money one of the types of capital for
investment or business but there is still the various type of capital
investment. The types of capital investment were various forms such as
tangible assets, intangible assets, tactical assets, and strategic assets.
First and
foremost, the type of capital investment that we can make as capital for investment
is monetary assets. Monetary assets are assets that carry a fixed value in terms
of currency units. For example, Ringgit Malaysia or Dollars. It depends on the
country to use the currency. The characteristics of monetary assets are a change in
real terms and restatement in financial statements. Examples of monetary
assets are cash, bank deposits and other receivables meant for settlement
through cash.
Second type of capital investment that we can make as capital for investment is
physical assets. Physical assets are also known as tangible assets. Tangible assets
or physical assets or items such as plant, machinery, buildings, and vehicles[1]
Third type of capital investment that we can make as capital for investment is
intangible assets. According to 2006
Federal Reserve Board analysis, Investment in intangible assets in the United States exceeds all
investments in tangible property and if accounted for would raise measured
productivity growth significantly (Corrado et al.,2006a,2006b). These assets
include computer software, research and development(R&D), intellectual
property and workforce training[2].According
to John Spacey many types of intangible capital are not considered a capital
investment according to current accounting practices. For example investments in
your knowledge might be considered human capital but this isn’t viewed as a
capital investment
[1]
Physical Asset Management,Dr Nicholas A,J Hastings,London,2010,Pages 3
[2]
Intangible assets measuring and Enhancing Their Contribution to Corporate Value
and Economic Growth,The National Academies Press Washington,2009,
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