Capital Base

DEFINITION of 'Capital Base'

1. The capital acquired during an IPO, or the additional offerings of a company, plus any retained earnings.

2. An initial investment plus subsequent investments made by an investor into their portfolio.

BREAKING DOWN 'Capital Base'

1. This is essentially the money contributed by the shareholders who first purchased shares in the company plus retained earnings.

2. Capital base is important because it provides a benchmark when measuring returns. Without it, investors and companies would be unaware of how they are doing relative to their investments.