As I understand it, capital is the value of the owners investment.
Therefore, if an owner puts a van into the business worth £2000 for example, the company owes the owner £2000.
The fact that the van depreciates over time shouldnt change the fact that the company still owes the owner £2000, or should it?
For example, if I borrowed £2000 from a bank, and did not make any repayments for a yr, I would still owe the bank £2000, even if inflation rose and the value of the money depreciates. Id still owe £2000
The owners investment would be nil in four yrs when the van has depreciated to scrap value. This loss of investment seems like a dis-incentive to invest.
The owner may get payoffs elsewhere via company profit, but may not. Could someone explain this to me, Is it just a case of risk / reward, or am I missing something?