What Is Fixed Capital? Definition, Pregnant Together With Examples

Definition of Fixed Capital

In general, the definition of fixed capital tin laissez passer on the axe last stated every bit under.

“Fixed upper-case missive of the alphabet is a compulsory initial investment made past times the entrepreneur to starting fourth dimension upward the activities of his business.”

Fixed upper-case missive of the alphabet is a mandatory old investment made at the introductory stage of a trouble organization establishment.

Fixed upper-case missive of the alphabet is non alike working capital, which is required on a continuous reason to operate (run) the ordinary course of educational activity of production as well as distribution of goods as well as services.

land, building, mechanism as well as other assets having a relatively permanent existence.”

Fixed upper-case missive of the alphabet is a permanent investment made to reckon the longer-term needs (requirements) of the trouble organization activities.

Thus, fixed upper-case missive of the alphabet has a permanent being inwards the business. It is unremarkably introduce inwards the shape of fixed assets similar land, building, plant, machinery, etc.

Meaning of Fixed Capital

The important of fixed upper-case missive of the alphabet is depicted inwards the next chart.

The important of fixed upper-case missive of the alphabet tin laissez passer on the axe last easily grasped from these points:

1. Fixed upper-case missive of the alphabet is a compulsory initial investment made inwards the business.
2. It helps to lay downward the basic infrastructure on which trouble organization is supposed to stand upward as well as flourish inwards a long run.
3. It is a constituent of full upper-case missive of the alphabet invested inwards the business.
4. It has a permanent being inwards the trouble organization to reckon its long-term needs.
5. It is used for purchasing fixed assets similar land, building, plant, machinery, etc.
6. It is besides used for purchasing intangible assets similar patents, copyrights, goodwill, etc.
7. It is required for promoting the business.
8. It is besides required for expansion, modernization as well as diversification of business.
9. Fixed upper-case missive of the alphabet gets depreciated every bit an property is used over fourth dimension amongst few exceptions similar inwards instance of land.
10. Fixed upper-case missive of the alphabet requirement is estimated past times the promoters of business. This estimation must last made every bit accurately every bit possible. To accomplish this, the promoters attempt professional person tending as well as induce got advice from experts such every bit engineers, architects, etc.

Read next articles to know to a greater extent than on the concept of fixed capital:

1. Features of fixed capital
2. Role or importance of fixed capital
3. Sources of fixed capital
4. Factors affecting fixed upper-case missive of the alphabet requirement

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Examples of Fixed Capital

The examples of fixed upper-case missive of the alphabet are depicted inwards the next image.

Common examples of fixed upper-case missive of the alphabet investments are every bit follows:

• Plant as well as machinery.
• Factory's reason as well as its buildings.
• Company's headquarter (HQ), administrative areas, regional as well as local offices, as well as their premises.
• Computing as well as communication infrastructure that generally includes workstations, servers, data-storage facilities, local-area networks, the internet, telephones, fax, then on.
• Patents, copyrights, goodwill, etc., besides gets covered nether fixed capital.