Introduction to Corporate Finance — Secretarial Practice STD 12 Commerce / Arts — Question
Maharashtra BoardEnglish MediumSTD 12 Commerce / ArtsSecretarial PracticeIntroduction to Corporate Finance4 Marks
Question
Fixed capital stays in the business almost permanently.
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Answer
Factors determining fixed capital requirements are:Fixed capital refers to capital invested for acquiring fixed assets.
These assets are not meant for resale.
Fixed capital is capital used for purchasing land and building, furniture, plant, and machinery, etc.
Such cap al is usually required at the time of the establishment of a new company.
Existing companies may also need such capital for their expansion and development, replacement of equipment, etc.
Modern industrial processes require the increased use of heavy automated machinery. Thus, it is rightly said that fixed capital stays in the business almost permanently.
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