Question

State whether the following statement is True or False :
Fixed capital is also referred as circulating capital.

Hint:

Remember the difference by their purpose: {Fixed} capital is for assets that stay {fixed} in place for a long time. {Circulating} capital {circulates} through the daily business cycle.

Answer 1

Fixed capital is the capital invested in acquiring long-term assets like land, buildings, and machinery. Circulating capital (or working capital) is the capital used for short-term, day-to-day operations, such as inventory, cash, and accounts receivable. They are distinct concepts.