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Fixed Capital: It is the funds required for the acquisition of those assets that are to be used over
and over for a long period.
Working Capital: It refers to that part of the capital which is needed for meeting out day- to-
day operational expenses.
The nature of business like whether it is trading or manufacturing or services affects the working
capital required.
For example in case of a manufacturing business like car manufacturing, huge investment is
required to procure the land, building, equipment, hiring highly skilled technical human
resources etc. Thus the investment required would be more.
Another example is a trading business where in the finished goods are brought purchased from
the suppliers and sold to the customers or retailers. In this case there is no need of huge land,
building, equipment or highly skilled human resources. And hence the investment required
would be less.
Compare Capitalization and capital structure.

Capitalization Capital Structure

Capitalization is the total amount of long-term Capital structure is the combination of various types of
capital fund raised by a business from its long-term capital raised by a business. The capital can be
creditors and shareholders. either from the owner or borrowed.

It comprises of debentures, free reserves, It comprises of bonds, debentures, loans, reserves etc.
shares and long-term loans

It determines the optimum capital It determines the kind of securities to be issued for raising
requirements to cater to various business the required funds. In other words it determines the
needs. patterns of financing

It is necessary to see that the capital is neither To ensure the liquidity and solvency of the company it is
surplus nor short. essential to maintain a good proportion between the fixed
and variable yield-bearing securities.