FINANCIAL MANAGEMENT — OCM STD 12 Commerce — Question

• Capital needed in the business to run day-to-day expenses is known as working capital.
  Working capital is generally used in current assets of business such as purchasing raw material, making payment to creditors, paying utility bills, etc.
• Working capital continuously circulates in the business.

Fixed capital:

• Capital invested in business for a period of five years or above is called fixed capital.
• Fixed capital is invested in fixed assets such as land, building, machinery, plant, furniture, etc. Thus, fixed capital remains in business for a long period.