Advertisements
Advertisements
Question
Distinguish between Fixed capital and Working capital.
Advertisements
Solution
| Points | Fixed capital | Working capital | |
| 1. | Meaning | Fixed capital refers to any kind of physical capital. i.e., fixed assets. | Working capital refers to current assets minus current liabilities. |
| 2. | Nature | It stays in the business almost permanently. | Working capital is circulating capital. It keeps changing. |
| 3. | Purpose | It is invested in fixed assets such as land, buildings, equipments, etc. | Working capital is invested in short-term assets such as cash, accounts receivable, inventory, etc. |
| 4. | Sources | Fixed capital funding can come from selling shares, debentures, bonds, long-term loans, etc. | Working capital can be funded with short-term loans, deposits, trade credit, etc. |
| 5. | Objectives of investment | Investors invest money in fixed capital, hoping to make a future profit. | Investors invest money in working capital for getting immediate returns. |
| 6. | Risk Involved | Investment in fixed capital implies more risk. | Investment in working capital is less risky. |
APPEARS IN
RELATED QUESTIONS
Select the correct answer from the options given below and rewrite the statement.
______ refers to the excess of current assets over current liabilities.
Select the correct answer from the options given below and rewrite the statement.
When the population is increasing at high rate, certain manufacturers find this as an opportunity to ______ business.
Select the correct answer from the options given below and rewrite the statement.
The sum of all ______ is gross working capital.
Write a word or a term or a phrase which can substitute the following statement.
The excess of current assets over current liabilities.
Write a word or a term or a phrase which can substitute the following statement.
The process of converting raw material into finished goods.
State whether the following statement is true or false.
The business will require huge funds if assets are acquired on a lease basis.
State whether the following statement is true or false.
A firm with large scale operations will require more working capital.
State whether the following statement is true or false.
Financial institutions and banks cater to the working capital requirement of business.
Answer in one sentence.
What is fixed capital?
State any four factors affecting fixed capital requirement.
Explain the following term/concept in detail:
Overhead
Distinguish between Fixed Capital and Working Capital.
Distinguish between Fixed Capital and Working Capital.
Liberal credit policy creates a problem of bad debts.
Liberal credit policy creates a problem of bad debts.
Distinguish between the following.
Fixed Capital and Working Capital
Liberal credit policy creates a problem of bad debts.
Liberal credit policy creates a problem of bad debts.
Liberal credit policy creates a problem of bad debts.
