fixed capital: meaning, definition, pronunciation and examples
C1Formal, Technical, Academic, Business
Quick answer
What does “fixed capital” mean?
The portion of a company's total capital that is invested in long-term assets such as buildings, machinery, and equipment, which are not intended for resale but for use in production.
Audio
Pronunciation
Definition
Meaning and Definition
The portion of a company's total capital that is invested in long-term assets such as buildings, machinery, and equipment, which are not intended for resale but for use in production.
In economics, it refers to physical assets that are used repeatedly in the production of goods and services, as opposed to circulating capital (like raw materials). It can also metaphorically refer to any foundational, long-term investment in a system or process.
Dialectal Variation
British vs American Usage
Differences
No significant differences in definition or usage. Spelling of related terms may differ (e.g., 'capitalisation' vs. 'capitalization').
Connotations
Identical technical connotations in both varieties.
Frequency
Equally common in professional and academic contexts in both the UK and US.
Grammar
How to Use “fixed capital” in a Sentence
[Company/Country] has/owns/invests in [AMOUNT] of fixed capital.The ratio of fixed capital to [working capital/total assets] is high.Depreciation reduces the value of fixed capital.Vocabulary
Collocations
Examples
Examples of “fixed capital” in a Sentence
verb
British English
- The company is capitalising its expenditure as fixed capital.
- They need to fix more capital in infrastructure.
American English
- The company is capitalizing its expenditure as fixed capital.
- They need to commit more capital to fixed assets.
adjective
British English
- The fixed-capital intensity of the industry is high.
- A fixed-capital investment programme was launched.
American English
- The fixed-capital intensity of the industry is high.
- A fixed-capital investment program was launched.
Usage
Meaning in Context
Business
The board approved a major investment in fixed capital to upgrade the manufacturing plant.
Academic
Classical economists distinguished between fixed and circulating capital in their models of production.
Everyday
Rarely used in everyday conversation. Might be paraphrased as 'the factory and machines'.
Technical
The firm's fixed capital includes its land, buildings, industrial machinery, and vehicles, all listed on the balance sheet.
Vocabulary
Synonyms of “fixed capital”
Vocabulary
Antonyms of “fixed capital”
Watch out
Common Mistakes When Using “fixed capital”
- Using 'fixed capital' to mean cash reserves or money that is 'fixed' in an account (incorrect).
- Confusing it with 'share capital' (the money raised by selling shares).
FAQ
Frequently Asked Questions
No. Fixed capital refers to physical, long-term assets like factories and machines. Money is financial capital, which can be used to buy fixed capital.
Fixed capital is for long-term use (e.g., a delivery truck). Working capital is for short-term operations (e.g., fuel for the truck, cash to pay drivers).
In modern accounting, purchased software used over multiple years can be classified as an intangible fixed asset, a form of fixed capital.
Depreciation accounts for the wear and tear or obsolescence of fixed assets over time, reducing their book value and affecting profit calculations and tax.
The portion of a company's total capital that is invested in long-term assets such as buildings, machinery, and equipment, which are not intended for resale but for use in production.
Fixed capital is usually formal, technical, academic, business in register.
Fixed capital: in British English it is pronounced /ˌfɪkst ˈkæp.ɪ.təl/, and in American English it is pronounced /ˌfɪkst ˈkæp.ə.t̬əl/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “Tied up in fixed capital”
- “A heavy fixed capital burden”
Learning
Memory Aids
Mnemonic
Think of a factory FIXED to the ground. Its machines and buildings are its FIXED CAPITAL—they stay put and are used for years to make products.
Conceptual Metaphor
BUSINESS IS A BODY: Fixed capital is the skeleton and muscles (the durable structure), while working capital is the blood (circulating resources).
Practice
Quiz
What is the primary characteristic of fixed capital?