What is meant by working capital? How is it different from fixed capital?
Answers
Answer:
Working capital is the amount of cash a business can safely spend. It's commonly defined as current assets minus current liabilities. Usually working capital is calculated based on cash, assets that can quickly be converted to cash (such as invoices from debtors), and expenses that will be due within a year.
Fixed capital is the investments done by the business for accruing long-term benefits. Working capital is the daily requirement pumped into the business. Fixed capital is used to acquire non-current assets of the company. Working capital is used to acquire the current assets of the company.
Answer:
Working capital is the amount of cash a business can safely spend. It's commonly defined as current assets minus current liabilities. Usually working capital is calculated based on cash, assets that can quickly be converted to cash.
The primary difference between fixed capital and working capital is that Fixed Capital is the capital which is invested by the company in procuring the fixed assets required for the working of the business whereas working capital is the capital which is required by the company for the purpose of financing its day to day operations.
Explanation:
Hope it helps.