Working Capital vs. Fixed Capital
Working capital and fixed capital are two important components of a company's capital structure. They differ in terms of their nature, usage, and impact on the company's operations.

1. Nature:
- Working Capital: Working capital refers to the funds that a company uses for its day-to-day operations. It includes cash, inventory, accounts receivable, and accounts payable. Working capital is a measure of a company's liquidity and its ability to meet short-term financial obligations.
- Fixed Capital: Fixed capital, on the other hand, refers to the funds that are used to purchase long-term assets such as land, buildings, machinery, and equipment. Fixed capital is used to support the company's operations over the long term and is not typically sold or converted into cash quickly.

2. Usage:
- Working Capital: Working capital is used to cover day-to-day expenses such as payroll, rent, utilities, and inventory purchases. It ensures that the company can continue its operations smoothly without interruption.
- Fixed Capital: Fixed capital is used to acquire long-term assets that are essential for the company's operations. These assets help the company generate revenue and grow over time. Fixed capital investments are usually planned for the long term and require careful consideration.
In conclusion, working capital and fixed capital serve different purposes in a company's financial structure. Working capital is essential for daily operations and maintaining liquidity, while fixed capital is necessary for long-term growth and investment in assets. Both types of capital are important for the overall financial health and success of a company.