Q.What is meant by fixed capital?

Business finance is the money a firm needs to establish, run, and grow its operations, covering both fixed capital (for long-term assets like land, buildings and machinery) and working capital (for day-to-day expenses like raw materials and wages). Because needs differ in duration, source and ownership pattern, the many sources available are classified along three bases at once. By period, sources are long-term (over five years, e.g. equity/debentures), medium-term (one to five years, e.g. institutional loans, public deposits) or short-term (under one year, e.g. trade credit, overdraft). By ownership, sources are owned (contributed by owners — equity shares, preference shares, retained earnings, with no fixed compulsory payment) or borrowed (raised from outside lenders — debentures, loans, public deposits, trade credit, which must be repaid with interest regardless of profit). By source of generation, sources are internal (generated from within, chiefly retained earnings) or external (raised from outside the business, such as a fresh issue of shares or a bank loan). The same instrument is often described under all three headings simultaneously — for instance, equity shares are long-term, owned and external all at once — and this multi-angle view is what lets a business systematically compare and select the sources best suited to a particular need.