Question

Distinguish between fixed and working capital​

Answer 1

Fixed capital -

1. Fixed capital refers to the investment of the enterprise in long term assets of the company.

2. Durable goods whose useful life is more than one accounting period.

3. Comparatively illiquid.

4. Used to buy non-current assets for business.

5. Strategic objectives.

Working capital -

1. Working capital means the capital invested in the current assets of the company.

2. Short term assets and liabilities.

3. Highly liquid.

4. Used for short term financing.

5. Operational objectives.

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