Question

How can you assess the financial requirements of an enterprise?​

Answer 1

Capital needed to acquire those assets which are used for production purposes for longer period of time and which are not acquired for selling purposes is termed as fixed capital or block capital. Obvious examples of fixed capital are capital for purchasing land and buildings, furniture’s and fixtures and machinery and plant.

Such capital is required usually at the time of establishment of new enterprise. However, existing undertakings may also need such capital to finance expansion and development programmes and to affect replacement of equipment.