Capital investment – the most important corporate finance task

The whole purpose of owning a business is for it to survive, grow and function for the long term. And when it comes to capital investment it refers to funds invested in a firm or enterprise for the purpose of furthering its business objectives. Capital investment may also refer to a firm’s acquisition of capital assets or fixed assets such as manufacturing plants and machinery that’s expected to be productive over many years. 

Therefore you can see why Capital investment would be the most important corporate finance task as it encompasses a wide variety of funding options for a business. While funding for capital investment is generally in the form of common or preferred equity issuances, it may also be through straight or convertible debt. That may range from an amount of less than R100 000 in seed financing for a start-up to amounts in the hundreds of millions for massive projects in capital-intensive sectors such as mining, utilities and infrastructure. 

And while capital investment is usually earmarked for capital or long-life assets, a portion may also be used for working capital purposes. And as we all know a business needs working capital for those day to day running costs. So to help keep your business lights on and doors open to your customers 

Capital investment is meant to benefit a company in the long run concerned with the distribution of capital for long-term uses. Companies make continual capital investment to sustain existing operations and expand their businesses for the future. The main type of capital investment is in fixed assets to allow increased operational capacity, capture a larger share of the market and in the process, generate more revenue.