It is often used to determine the share of a company or organization as well as the amount of their liabilities based on its free capital. A measure of the financial condition of a company at a specific point in time. One of the most important characteristics of financial stability is its presence and size. Liquid or cash capital can be used in a variety of ways.

Free capital serves as a kind of protection for the enterprise. The higher a company's free and equity capital, and the higher its creditworthiness, the more attractive it is to investors. All potential investors are primarily interested in the material well-being of the company in which they invest.

Free capital is the term used to evaluate the financial position of an organization at a point in time. It measures its liquidity along with equity capital, creditworthiness and other key aspects which demonstrate whether the company is doing well or not, so that potential investors will be in a better position to judge whether to invest or not in it.

Free capital refers to the portion of a company's capital that is not tied up in fixed assets or operating expenses, thus being readily available for investment or other business activities. This liquidity enables a company to seize new opportunities, address unexpected expenses, and enhance operational flexibility. Free capital is crucial for growth, as it can be allocated to research and development, marketing campaigns, or expansion initiatives.

In the context of personal finance, free capital represents the funds an individual has available for investing after covering essential expenses and setting aside emergency savings. Investors often seek to maximize their free capital to take advantage of market opportunities and build wealth over time. Both companies and individuals benefit from effectively managing and optimizing their free capital to ensure financial health and stability.