ENTERPRISE CAPITAL AS A FINANCIAL AND ECONOMIC CATEGORY: ESSENTIAL FEATURES AND DETERMINANTS OF FORMATION

Abstract

The article substantiates the need to clarify the economic meaning of enterprise capital from the perspective of contemporary corporate finance. Its purpose is to systematise scholarly interpretations of capital, assess their analytical strengths and limitations, and formulate a coherent definition that can underpin further research into the financial mechanism of capital formation and utilisation. The methodological framework combines comparative analysis, scientific abstraction, logical synthesis and a systems approach. The paper distinguishes capital from assets, financial resources, financing sources and cash flows, demonstrating that conflating these categories makes it difficult to assess funding costs and the effectiveness of capital utilisation. Resource-based, balance-sheet, value-based, investment-oriented and institutional perspectives are critically compared. The discussion examines how capital-structure irrelevance, trade-off theory, information asymmetry and agency theory contribute to explaining financing decisions. Each framework illuminates an important aspect of capital, yet none independently provides a comprehensive connection between resource mobilisation, allocation and financial outcomes. A proposed working definition integrates financing sources, the commitment of resources to business operations, the rights of capital providers, the cost of funding and the risks associated with capital use. The paper also outlines the implications of this definition for distinguishing equity from debt, interpreting the relationship between the asset and liability sides of the balance sheet, and assessing the sustainability of financing choices. Its practical contribution lies in offering a set of conceptual attributes that can inform the design of a financial mechanism, the selection of assessment indicators and the specification of future empirical models. It is concluded that enterprise capital should be understood both as the financial foundation of economic activity and as a system of economic relationships governing its formation and use. The proposed definition is a theoretical proposition rather than an empirically validated finding and requires further testing across industries and firm sizes.