2 difference between fixed and working capital

  • Fixed capital: This is money which is used to purchase assets that will remain permanently in the business and help it to make a profit.
  • Working capital: Working capital is that part of capital invested which is used for running the business such like money which is used to buy stock, pay expenses and finance credit.

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he difference between working capital (w/c) and fixed capital (f/c) is as follows:
 
i) f/c is used 2 buy fixed assets like land and building.w/c is used to carry out day to day operations.
 
ii) f/c consists of land ,building,tools,machines etc.w/c consists of cash,marketable securities,accounts receivable,stock etc.
 
iii)f/c includes long term financial decisions.w/c includes short term financing decisions.
 
iv) f/c is mainly required for operational activities.w/c is required for trading activities.
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working capital-raw material and money in hand are called working capital.

fixed capital-those assets that can be used in production over many  years are known as fixed capital.

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