Working Capital and Fixed Capital

Easy way to learn and memorized – class 12th – S.P – Notes of business finance – Difference between Fixed Capital and Working Capital, Distinguish between working capital and fixed capital –  business finance – Secretarial Practice – Notes,  & Distinguish Between – according to the New Textbook for HSC Board – Difference between, Study material, studies notes, study notes.

Sr.NoDistinction pointWorking Capital Fixed Capital
1.MeaningWorking capital refers to current assets minus current liabilities.Fixed capital refers to any kind of physical capital. example assets
2.SourcesSources of Working capital are short term loans, deposits, trade credit, etcSources of Fixed capital fund can come from selling shares, debentures, long term loans, bonds, etc
3.PurposePurpose of Working capital is to invested in short term assets such as cash, account receivable, etc.Purpose of fixed Capital is to  invested in  assets such as land, building, equipment, etc.
4.NatureWorking capital is circulating capitalIt stays in business almost permanently i.e. for more than one accounting year.
5.Risk Involved Investment in working capital is less risky.Investment in fixed capital implies a risk.
6.Objective of investmentInvestor invests money in working capital for getting immediate returnInvestor invests money in fixed capital hoping to make future profit.

Leave a Reply

Your email address will not be published. Required fields are marked *