Question
Distinguish between fixed capital and working capital.

Answer

Difference between fixed and working capital:
S. No
Basis
Fixed capital
Working capital
(i)
Time period
Required for long-term.
Required for short-term.
(ii)
Purpose
Money needed to buy fixed assets.
Money needed to buy current assets.
(iii)
Nature
Remains sunk in business.
Revolves in business.
(iv)
Source
Raised through shares debentures and term loans.
Raised through banks, trade credit, shares and debentures.

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