Fixed capital

Fixed capital,

Definition of Fixed capital:

  1. The concept of fixed capital was first introduced in the 18th century by the political economist David Ricardo. For Ricardo, fixed capital referred to any kind of physical asset that is not used up in the production of a product. This was opposed to Ricardo's idea of circulating capital, such as raw materials, operating expenses, and labor. In Marxian economics, fixed capital is closely related to the concept of constant capital.

  2. Capital invested in fixed assets.

  3. That is employed in assets of durable nature for repeated use over a long period. Also called fixed investment.

  4. Fixed capital includes the assets and capital investments, such as property, plant, and equipment (PP&E), that are needed to start up and conduct business, even at a minimal stage. These assets are considered fixed in that they are not consumed or destroyed during the actual production of a good or service but have a reusable value. Fixed-capital investments are typically depreciated on the company's accounting statements over a long period of timeā€”up to 20 years or more.

How to use Fixed capital in a sentence?

  1. The opposite of fixed capital is variable capital.
  2. Fixed capital consists of assets that are not consumed or destroyed in the production of a good or service and can be used multiple times.
  3. Property, plant, and equipment are standard fixed capital items.
  4. Firms are most likely to invest in new fixed capital when the prospects for an upturn appear strong, and least likely to invest at the end of an upturn, when markets appear saturated, or during the downturn that follows.
  5. Fixed capital assets are usually illiquid items and are depreciated over time.

Meaning of Fixed capital & Fixed capital Definition