Legal Definitions - fixed capital

Definition: Fixed capital refers to the long-term assets that a company invests in to produce goods or services. These assets are not intended for resale and are expected to last for more than one year.

Examples: Examples of fixed capital include buildings, machinery, equipment, and vehicles. For instance, a manufacturing company may invest in a new production line to increase its output. The production line is a fixed asset because it is expected to last for several years and is not intended for resale.

Explanation: Fixed capital is an essential component of a company's operations. These assets are used to produce goods or services and are expected to generate revenue for the company over several years. The examples illustrate how companies invest in fixed assets to improve their operations and increase their profitability. By investing in fixed capital, companies can improve their efficiency, reduce their costs, and increase their competitiveness in the market.