{"id":6483,"date":"2021-09-19T13:12:27","date_gmt":"2021-09-19T07:42:27","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=6483"},"modified":"2025-10-07T20:06:19","modified_gmt":"2025-10-07T14:36:19","slug":"factors-affecting-fixed-capital","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/","title":{"rendered":"12 Factors Affecting Fixed Capital &#8211; Scholarszilla"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Factors-Affecting-Fixed-Capital--1024x576.jpg\" alt=\"Factors Affecting Fixed Capital \" class=\"wp-image-6493 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Factors-Affecting-Fixed-Capital--1024x576.jpg 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Factors-Affecting-Fixed-Capital--300x169.jpg 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Factors-Affecting-Fixed-Capital--768x432.jpg 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Factors-Affecting-Fixed-Capital--1536x864.jpg 1536w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Factors-Affecting-Fixed-Capital--640x360.jpg 640w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Factors-Affecting-Fixed-Capital-.jpg 1920w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;\" \/><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d1bec7b76e4\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d1bec7b76e4\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#Factors_Affecting_Fixed_Capital\" >Factors Affecting Fixed Capital<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#Factors_Affecting_Fixed_Capital_Requirement\" >Factors Affecting Fixed Capital Requirement<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#1_Nature_of_business\" >1) Nature of business<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#2_Size_of_business\" >2) Size of business<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#3_Scope_of_business\" >3) Scope of business<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#4_Extent_of_lease_or_rent\" >4) Extent of lease or rent<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#5_Arrangement_of_sub-contract\" >5) Arrangement of sub-contract<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#6_Acquisition_of_old_assets\" >6) Acquisition of old assets<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#7_Acquisition_of_assets_on_concessional_rate\" >7) Acquisition of assets on concessional rate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#8_International_conditions\" >8) International conditions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#9_Trend_in_economy\" >9) Trend in economy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#10_Population_trend\" >10) Population trend<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#11_Consumer_preference\" >11) Consumer preference<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/scholarsclasses.com\/blog\/factors-affecting-fixed-capital\/#12_Competitive_factor\" >12) Competitive factor<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"Factors_Affecting_Fixed_Capital\"><\/span><strong>Factors Affecting Fixed Capital<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-pullquote\"><blockquote><p><strong><em>Fixed capital is the capital that is used for buying fixed assets that are used for a longer period of time in the business. These assets are not meant for resale.<\/em><\/strong><\/p><\/blockquote><\/figure>\n\n\n\n<p>In simple words, <a href=\"https:\/\/scholarsclasses.com\/blog\/what-is-fixed-capital\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/what-is-fixed-capital\/\" rel=\"noreferrer noopener\">fixed capital<\/a> refers to capital invested for acquiring fixed assets. It stays in the business for a long period almost permanently. <\/p>\n\n\n\n<p><strong>Examples of <a href=\"https:\/\/ec.europa.eu\/eurostat\/statistics-explained\/index.php?title=Glossary:Fixed_capital\" data-type=\"link\" data-id=\"https:\/\/ec.europa.eu\/eurostat\/statistics-explained\/index.php?title=Glossary:Fixed_capital\" target=\"_blank\" rel=\"noopener\">fixed capital<\/a> are &#8211;<\/strong><br>Capital used for purchasing land and building, furniture, plant, and machinery, etc. Such capital is required usually at the time of the establishment of a new company. However, existing companies may also need such capital for their expansion and development, replacement of equipment, etc.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/public-deposits-meaning\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/public-deposits-meaning\/\" target=\"_blank\" rel=\"noreferrer noopener\">Public Deposit <\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/gdr-meaning\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/gdr-meaning\/\" target=\"_blank\" rel=\"noreferrer noopener\">Global Depository Receipt (GDR)<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/scholarsclasses.com\/blog\/features-of-shares\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/features-of-shares\/\" target=\"_blank\" rel=\"noreferrer noopener\">Features of Shares<\/a><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Factors_Affecting_Fixed_Capital_Requirement\"><\/span><strong>Factors Affecting Fixed Capital Requirement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"1_Nature_of_business\"><\/span><strong>1) Nature of business<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Manufacturing industries and public utilities have to invest huge amounts of funds to acquire fixed assets. While Trading business may not need huge investments in fixed assets.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"2_Size_of_business\"><\/span><strong>2) Size of business<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Where a business firm is set up to carry on large-scale operations, its fixed capital requirements are likely to be high. This is because most of their production processes are based on automatic machines and equipment.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"3_Scope_of_business\"><\/span><strong>3) Scope of business<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>There are business firms that are formed to carry on production or distribution on a large scale. Such businesses would require more amount of fixed capital.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"4_Extent_of_lease_or_rent\"><\/span><strong>4) Extent of lease or rent<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>If an entrepreneur decides to acquire assets on lease or on rental basis, less amount of funds for fixed assets will be needed for the business.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"5_Arrangement_of_sub-contract\"><\/span><strong>5) Arrangement of sub-contract<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>If the business wants to sub-contract some processes of production to others, limited assets are required to carry out the production. It would minimize fixed capital requirement of business.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"6_Acquisition_of_old_assets\"><\/span><strong>6) Acquisition of old assets<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>If old equipment and plants are available at low prices, then it would reduce the need for investment in fixed assets.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"7_Acquisition_of_assets_on_concessional_rate\"><\/span><strong>7) Acquisition of assets on concessional rate<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>With the view to foster industrial growth at regional level, the government may provide land and building, materials at concessional rates. Plants and equipment may also be made available on installment basis. Such facilities will reduce the requirement of fixed assets.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"8_International_conditions\"><\/span><strong>8) International conditions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>This factor is very significant particularly in large organizations carrying business on international level. For example companies expecting war, may decide to invest large funds to expand fixed assets before there is shortage of materials.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"9_Trend_in_economy\"><\/span><strong>9) Trend in economy<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>If the future of the company is anticipated to be bright, it gives green signal to business entrepreneurs to carry out all sorts of expansion of business firm. In that case, large amount of funds are invested in fixed assets so as to reap the benefits in future.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"10_Population_trend\"><\/span><strong>10) Population trend<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>When the population is increasing at a high rate, certain manufactures find this as an opportunity to expand business. For example- the automobile industry, electronic goods manufacturing industry, ready-made garments, etc. which necessitates huge amount of fixed capital.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"11_Consumer_preference\"><\/span><strong>11) Consumer preference<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Industries providing goods and services which are in good demand, will require large amount of fixed capital. For example &#8211; Mobile phone manufactures as well as mobile network providers.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"12_Competitive_factor\"><\/span><strong>12) Competitive factor<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>This factor is prime element in decision making regarding fixed capital requirements. If one of the competitors shifts to automation, the other companies in the same line of activity, will be compelled to follow that competitor.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":6493,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[2543],"class_list":["post-6483","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-misc","tag-factors-affecting-fixed-capital"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/6483","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=6483"}],"version-history":[{"count":4,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/6483\/revisions"}],"predecessor-version":[{"id":39338,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/6483\/revisions\/39338"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/6493"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=6483"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=6483"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=6483"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}