Difference between Fixed capital and Working capital

The difference between Fixed capital and Working capital represents capital to meet long-term as well as short-term requirements.

Meaning of Fixed Capital:

Fixed capital is the money invested for more than one production cycle (one year). Fixed capital includes long-term assets. Purchasing various fixed assets such as Plant and Machinery, Equipment, Furniture, Vehicles are covered under fixed capital.

Fixed-capital investments are typically depreciated on the company’s accounting statements over a long period of time.

Meaning of Working Capital:

Working capital is a net-working capital that is calculated with the company’s current  assets and  accounts receivable unpaid bills) and its current liabilities. working capital is required for the day-to-day activities of an organization.

Formula to calculate the W.C.=Current assets\Current liabilities

The working capital is, compared to a company’s current assets to its current liabilities, for instance by using the current ratio.

The Chart of difference between Fixed Capital and Working Capital

Conclusion:

Thus, Fixed capital is the money invested for more than one production cycle (one year). Fixed capital includes long-term assets. On the other side, Working capital is a net working capital that is calculated with the company’s current  assets and  accounts receivable unpaid bills) and its current liabilities.

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