There are various factors affecting the requirement of fixed capital.

Answer: The statement is justified.

Fixed capital is the capital invested in fixed assets such as land, building, plant and machinery. The amount required differs from company to company because of the following factors:

• Nature of business: Manufacturing and public utility concerns (railways, power) need large fixed capital; trading concerns need less.
• Size of business: A large scale business requires more fixed assets and hence more fixed capital.
• Scope of business: A company doing all processes itself needs more fixed capital than one that outsources some processes.
• Technology: Capital-intensive (automated) technology requires more fixed capital than labour-intensive methods.
• Method of acquiring assets: Buying assets needs more fixed capital than leasing or hire purchase.
• Diversification and growth plans: A company planning expansion or new product lines requires more fixed capital.

Thus the requirement of fixed capital depends on various factors.