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Fixed capital requirement and working capital requirements for class 11 business study?
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Fixed Capital Requirement
Fixed capital refers to the long-term investment needed for acquiring fixed assets that are essential for the operation of a business. These assets are not intended for resale but are crucial for production processes.
Working Capital Requirement
Working capital refers to the short-term financial needs of a business, ensuring smooth day-to-day operations. It is essential for covering immediate expenses and maintaining liquidity.
Understanding both fixed capital and working capital is crucial for effective financial management and operational success in a business.
Fixed capital refers to the long-term investment needed for acquiring fixed assets that are essential for the operation of a business. These assets are not intended for resale but are crucial for production processes.
- Definition: Fixed capital includes investments in land, buildings, machinery, and equipment.
- Purpose: It supports the production capacity of the business and ensures operational efficiency.
- Duration: The investment has a long-term horizon, often lasting several years.
- Factors Influencing Fixed Capital:
- Nature of the business
- Scale of operations
- Business goals
Working Capital Requirement
Working capital refers to the short-term financial needs of a business, ensuring smooth day-to-day operations. It is essential for covering immediate expenses and maintaining liquidity.
- Definition: Working capital is the difference between current assets and current liabilities.
- Purpose: It ensures that a business can meet its short-term obligations and continue operations without any disruption.
- Components:
- Inventory
- Accounts receivable
- Cash and cash equivalents
- Factors Influencing Working Capital:
- Nature of the business
- Sales volume
- Credit policies
Understanding both fixed capital and working capital is crucial for effective financial management and operational success in a business.
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Fixed capital requirement and working capital requirements for class 11 business study?
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Fixed capital requirement and working capital requirements for class 11 business study? for Class 9 2024 is part of Class 9 preparation. The Question and answers have been prepared according to the Class 9 exam syllabus. Information about Fixed capital requirement and working capital requirements for class 11 business study? covers all topics & solutions for Class 9 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Fixed capital requirement and working capital requirements for class 11 business study?.
Fixed capital requirement and working capital requirements for class 11 business study? for Class 9 2024 is part of Class 9 preparation. The Question and answers have been prepared according to the Class 9 exam syllabus. Information about Fixed capital requirement and working capital requirements for class 11 business study? covers all topics & solutions for Class 9 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Fixed capital requirement and working capital requirements for class 11 business study?.
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