Question

Differentiate between Fixed Capital and Working Capital.

Answer 1

Working Capital refers to the capital, which is used to perform day to day business operations. Fixed capital investments include durable goods, which will remain in the business for more than one accounting period. On the other hand, Working capital comprises of short-term assets and liabilities of the business.

Answer 2

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Answer - Fixed capital and working capital come under a factor of production which is Physical capital.

Fixed capital - Tools and machines range from very simple tools to sophisticated machines such as threshers, generators
Thus, tools and machines are used in fixed capital and it is fixed.


Working capital - In working capital the production always requires raw materials and money. So, in case of working capital raw materials and money is used.

Hope it helps !