Capital refers to durable financial assets that generate income through investment. It can be thought of as a long term investment to provide the business with future cash flow. Common examples include property, buildings, equipment, machinery, patents, software and cash reserves.
A key concept to note is that as an alternative to generating an expense or acquiring a short term asset, the investment of capital provides the business with long term economic value. This is important for long term planning and protecting against future fluctuations.