What does the term "financial capital" encompass?

The term "financial capital" encompasses a broader scope than just cash on hand; it refers to the monetary resources that a business can use for investment and operations. Specifically, "financial capital" includes both invested money and purchasing power, which means it covers not only the cash available but also access to funds through various means such as loans, equity, and other forms of financing. This capital enables a business to expand, invest in new projects, cover operating costs, and ultimately drive growth.

Cash alone represents only a small component of a company's overall financial health and capabilities. Other assets that can be transformed into cash or used for purchasing goods and services also fall under the umbrella of financial capital. Thus, the correct answer reflects the comprehensive nature of financial capital, as it is critical for a business's operations and strategic objectives.