Capital is the foundation base of any business. It is the assurance of the sustainability and stability of a Company .Capital is divided into two categories one is the Working capital and the other is the Fixed capital , now both of the capitals has their own significance in the functioning of a company, before we come to a conclusion and designate one of them as more important let us try to understand that what actually they mean and what is their role.
Working capital is the capital which is not permanent in the company. It’s regularly coming and going. Like the raw materials, the raw materials are brought in a factory production is done then the products are transported to wholesellers or warehouses and then again the new raw materials are brought in the industry. The raw materials are not permanent in the factory or industry that is why it is known as working capital. The petty cash is also comes under working capital first cash is used in paying bills buying commodities and then new cash comes in through sales.
Fixed capital is the capital which is permanent and remains in the factory or Industry or any business for a longer period of time. Like machines, vehicles Computers etc. They are bought either to boost production or sales and are used for much longer time in the company. They are the assets for a company and they also play a vital role in smooth functioning of business activities.