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The differences between fixed capital requirement and working capital requirement on the
basis of various criterion are giving below.

Fixed Capital Requirement Working Capital Requirement

Meaning This is the capital required to meet This is the capital required to meet the short
the long term or permanent needs term or current needs of the business and
of the business. also to meet the day to day operational
expenses

Scope Capital needed for Permanent or Short term Capital needed for wages,
long term assets like building, land, utilities, maintenance etc.
equipment and plant.

Nature Nature is permanent or long term Nature is short term and exists in the form
and exists in the form of tangible of capital needed for daily expenses of the
or intangible assets of the enterprise.
enterprise.

Duration Fixed capital is permanent and long Working capital is short term in duration.
term in duration.

Sources of Procured through the long term Procured through the financial resources like
procurement financial resources like i. Short/medium term loans from banks or
used i. Issue of shares financial institutions.
ii. Issue of debentures ii. Other finance companies
iii. Gathering public deposits iii. Internal sources
iv. Reinvesting the profits iv. Public deposits
v. Long term loans taken from bands
and other financial institutions.

Factors that determine the amount of working capital required by an enterprise
Working capital is that part of the capital which is needed for running working or current
requirement of the enterprises and also for taking care of the day-to-day operational expenses.
It varies among different enterprises. The following factors determine the working capital
required by any enterprise.
1. Nature and size of business: A business that has a production process requires more working
capital compared to a business that deals with the trade services. Also, large scale units require
large working capital and small scale units require small working capital.
2. Business Cycle: When the demand for the business varies, the business needs more working
capital during the boom period and less working capital during depression.