The lifeblood of a business

Capital is the lifeblood of a business. Without it, wages cannot be paid, supplies of components or ingredients cannot be purchased, operational expenses cannot be met.

Capital can be sourced from retained earnings or sought from financial markets.

Often, a business must seek finance. In broad terms, there are two kinds: equity and debt. Equity involves an entity giving money to a business in return for ownership of a part of the business. Debt involves an entity lending money to the business in return for a payment of interest. The two have different risk and return characteristics for both sides of the agreement.

In the game, equity based finance is raised through a sharemarket and debt based finance is raised through a bond market.