Question

what is meant by working capital? how it is different from fixed capital?

Answer 1

Raw materials and money in hand is known as working capital.

Fixed capital is the tools machines and buildings which can be used in production in long periods of time, while working capital is the raw material and money in hand.

Fixed capital is fixed and cannot be changed in a short period of time whereas working capital can be changed in a short period of time.

Cheers!!

Answer 2

Heya friend,

Here is the answer:

WORKING CAPITAL:-

1) Raw materials and money is called working capital.

2) Production needs a variety of raw materials as well money.

3) Raw materials Eg: Yarn for weaving(used by weaver), Clay for making pots. (used by potter).

Money in hand is required for making payments and buying some raw materials.

FIXED CAPITAL:-

1) Tools, Machines and buildings are called fixed capital.

2) These are called as fixed one because they are used over many years

3) Tools and machines ranges from simple to sophisticated ones.

Eg for simple tools: Plough,Hoe (farmer's tools)
Eg for sophisticated tools: Generators, Computers

Hope my answer helps you :)