Fixed capital

Answer: Fixed capital is the capital invested in fixed (long-term) assets of a business.

It is used to acquire assets such as land and building, plant and machinery, furniture and vehicles, which are used for a long period and are not meant for resale. It is also called block capital because it remains blocked in fixed assets for a long time. It is raised from long-term sources such as equity shares, preference shares, debentures, long-term loans and retained earnings. The amount of fixed capital needed depends on the nature and size of the business, the method of production and whether assets are bought or taken on lease.