Capital Base
The term "capital base" has various connotations in the finance world, but, in general, it refers to a base level of funding. For those companies who just went public in an initial public offering, for example, the capital base is the money acquired from the offering, plus any accumulated earnings made through regular sales.
Banks provide a particularly nuanced case. For banks, their capital base is their assets minus their liabilities. Simple enough. They are required to keep a certain amount of capital on hand in order to make loans and service their customers.
But sometimes the value of the collateral backing up a bank's loans goes down, threatening the amount of the capital base. For example, the value of local real estate may have tanked or interest rates may have gone way up. As a result, the amount being paid back on loans is less than the amount the bank needs. The bank will have to raise funds by issuing bonds, reducing expenses or increasing their assets.
"Capital base" also refers to opening an account in a brokerage firm. Your capital base is the money you put into your account in order to purchase securities. Future contributions to the account add to your capital base (as does any profits you make on your investments).
Related or Semi-related Video
Finance: What is a Current Asset?16 Views
Finance, a la shmoop. What is a current asset? Current yeah it's kind of a [Picture of a currant on a plant]
socialist raisin there, you know they all look about alike but that's a [Soldiers marching in front of Stalin with currants for heads]
currant and has nothing to do with current as cur-rent remember it like
your rent comes due soon, you rent a place for a year or less usually or at [Guy sticks his head out of pile of overdue bills]
least that's how long, you know lock in your rental rate. So if your [Someone signing a contract]
asset is current then it can be turned into cash within a year. That's how we
remember it here around Shmoop. Examples? A bond coming due in a year or less. [Bond document]
Companies store their cash all the time in short term paper like certificates of
deposit or Bank CDs which come due in less than a year. that's a current asset. [List of short-term paper]
And companies buy these kinds of bonds so they get a little more interest than
from their banks you know checking account. They buy stocks as well, shares [New interest rate is very small]
of goog can be easily converted into cash quickly. Shares in Google are a [Current asset stamp]
current asset. Ounces of gold, yep easily a current asset. All right you get the
idea, so what's not current well fourteen thousand acres of solar panel land that [Huge fields full of solar panels]
your company owns. If you ever had to sell it while there are very few buyers
and it likely would take more than a year just to figure out all the [Calendars popping up]
regulatory restrictions on selling it. A big old factory well can't sell that on [Red cross appears on a factory]
Amazon or Ebay, definitely not current. Your brand equity
in your corporation like the relationship you've developed with your
consumers, yeah it's another non-current asset you can't exactly go to the bank [Guy going up to the bank and pleading]
and convert brand loyalty to USD. So that's it current assets they live here [Arrow pointing to current assets on a balance sheet]
on this side of the balance sheet way up top in the good view seats high on the [Current assets in a tree]
vine of the tree. So put down those currants, stop ranting about the [Stalin holding a currant]
proletariat and for God's sake just buy some raisins. [Guy pointing to a box of raisins]
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