Financial Capital is the basis for valuation by all fundamentalists. Financial capital constitutes a distinct category outside both tangible and intangible assets. All efforts of operations and processing of tangible/intangible assets is to increase the financial capital and profitability of the corporate organization.

Financial Capital is the best known form of capital, and is what most people regard as capital. It is the basis for valuation by all fundamentalists. It consists of Investment Capital (Long term funds) and floating or Working capital (short-term funds).

Financial Capital comes in many forms: stock certificates, notes, debt, options and many other financial instruments including cash. Even though these forms of financial capital still form the basis of the valuation of a company or organisation, traditional balance sheets are no longer the only source of information to determine a company's true value.

Example:

The following example illustrates how knowledge can be turned into financial capital.

When the Dutch aircraft manufacturer Fokker was in financial difficulties, it worked out a (controversial) technolease structure with its bank. The company sold its patent rights on core technologies to the bank and then leased them back. By doing so, Fokker could immediately cash in on knowledge owned by the company and put the cost of owning that knowledge (lease) on the balance-sheet. Knowledge was effectively turned into financial capital.

As a side note: It is amazing how companies, especially publicly traded ones, spend billions on aggregating their financial data into statements, such as quarterly and annual reports for shareholders, only to have financial analysts immediately try to extract and dissect that information into knowledge that is pertinent to their analysis of the company.

The future of networking, investor demand and government mandate could provide a world where registered investors and analysts could connect directly into an organization's General Ledger system that would be providing real-time information. It is doubtful this will take place in the near future, but the concept is certainly thought provoking.