Fixed Capital
Definition of 'Fixed Capital'Assets or capital investments that are needed to start up and conduct business, even at a minimal stage. These assets are considered fixed in that they are not used up in 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 time, up to 20 years or more.Examples include factories, office buildings, computer servers, insurance policies, legal contracts and manufacturing equipment – anything that is not continually purchased in the course of production of a good or service. |
|
Investopedia explains 'Fixed Capital'The amount of fixed capital needed to set up a business is quite variable, especially from industry to industry. Some lines of business, by their nature, require high fixed-capital investment. Common examples would include industrial manufacturers, telecommunications providers and oil exploration firms.Fixed-capital investments typically don't depreciate in the even way that is shown on income statements. Some devalue quite quickly, while others have nearly infinite "usable" lives. But the depreciation method allows investors to see a rough estimate of how much value fixed-capital investments are contributing to the current performance of the company. |
Related Definitions
Articles Of Interest
-
Digging Into Book Value
This calculation will serve up your portion of the shareholder pie. -
Looking Deeper Into Capital Allocation
Discover how companies decide how to spend their cash in a variety of market conditions. -
Zooming In On Net Operating Income
NOI is a long-run profitability measure that smart investors can count on. -
The Ins and Outs Of In-Process R&D Expenses
Are these charge-offs fair accounting or earnings manipulation? Learn more here. -
Stock Basics Tutorial
If you're new to the stock market and want the basics, this is the tutorial for you! -
Depreciation: Straight-Line Vs. Double-Declining Methods
Appreciate the different methods used to describe how book value is "used up". -
Financial Statement: Extraordinary Vs. Nonrecurring Items
When it comes to analyzing a company, successful analysts spend considerable time differentiating between accounting items that are likely to recur going forward from those that most likely will ... -
Get A Career In Showbiz Accounting
An accounting career doesn't have to be boring. If you love numbers, but want excitement as well, consider the field of showbiz accounting. -
What Management Accountants Do
If you like keeping track of a company's income and expenses but also want to hold a position with significant responsibility and authority, management accounting could be the job for you. -
The Basics Of A Financial Analysis Report
Running financial analysis on a company or industry is a key skill every investor must learn and understand how to undertake without which an ineffective financial report and investment recommendation ...