Q.Distinguish between fixed capital and working capital.

Fixed capital is the capital that a company invests in permanent, long-term assets such as land, buildings, plant, machinery, furniture and vehicles — assets used repeatedly in the business.

Every company needs durable assets to carry on production and operations. The funds locked up in these long-lasting assets constitute its fixed capital. Such capital is invested for a long period and cannot be easily withdrawn, because the assets it buys are not meant for resale but for repeated use.

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Fixed capital is the money a company invests in permanent, long-term assets that stay in the business for many years.

Fixed capital refers to the funds required to buy fixed assets such as land, buildings, plant, machinery, furniture and vehicles. These assets form the base on which the business operates. They are purchased once and used repeatedly over a long period to produce goods or provide services, rather than being sold off in the ordinary course of business.

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