Both fixed capital and working capital are the parts of physical capital required for production.
(i) Fixed Capital :
(a) It includes fixed factors of production which are used for years.
(b) Tools and machines range from very simple tools such as a farmer'* plough to sophisticated machines such as generators, turbines etc.
(c) It includes tools, machines, buildings etc.
(d) They remain constant for many years of production and increased or decreased only when needed.
(ii) Working Capital :
(a) It includes variable factors of production which are needed to be arranged every time at the time of production.
(b) Whatever money and raw material required for production are included in it.
(c) It is required to be arranged according to the desired production.
(d) They are dynamic depending upon the profits and income of last season.
