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Fixed capital investments represent the acquisition and maintenance of long-term assets. A fixed capital investment can be tangible asset, such as a building, or an intangible asset, such as an intellectual property. Working capital refers to the deployment of financial resources in the day-to-day business operations. Investing in working capital involves acquiring short-term assets and incurring short-term liabilities. The fixed capital investment and working capital investment activities of the business are reported on a company's balance sheet.
ScopeFixed capital investments serve strategic objectives -- that is, long-term plans of the business. The benefits of fixed capital investments are spread over several years. In contrast, working capital investments serve operational objectives -- that is, day-to-day activities of the business. Therefore, the scope of a fixed capital investment stretches several years ahead, while that of a working capital investment is limited specific accounting periods or fiscal years.
LiquidityLiquidity is the ease with which business resources can be converted into cash. Working capital assets have high liquidity because they can readily be converted into cash. For example, a business can easily convert accounts receivables into cash through invoice factoring -- that is, selling invoices to third parties. Fixed capital assets, on the other hand, have low liquidity because they are expensive and require lengthy asset-disposal procedures.
BudgetingFixed capital investment decisions are made through capital budgeting processes. Capital budgeting involves comparing the cash flows a fixed asset investment can generate during its useful life. This is done using techniques such as net present value, internal rate of return and payback period. A fixed capital investment is accepted only when its potential cash inflows outweigh the cash outflows. The budgeting process for working capital investment is based on the estimated scope of operations for a particular accounting period or fiscal year.
FinancingWorking capital investment is financed through short-term debt while fixed capital investment is financed through long-term debt. Short-term debts are lines of credit, such as bank overdrafts, that are repayable within a year. They are listed as current liabilities in the balance sheet. Long-term debts are repayable over longer periods of time. They are listed as long-term liabilities in the balance sheet.
ProcurementWorking capital investment must be procured with urgency to facilitate smooth business operations. For example, a manufacturing business must always have sufficient inventory to avoid unnecessary interruptions of production activities. The procurement of fixed capital investment is a lengthy process, especially when it involves borrowing finance from external sources.
Investment deals with Non Current Assest whereas on the other hand Working Capital deal with current assets and liabilities.
Working capital is a narrower definition of the resources used in a firm's operations. Working capital focuses on the day-to-day operations and, therefore, includes only items such as inventory, cash, raw materials and accounts receivable.
Total Investments Represent investment in securities which directly or indirectly creates a loan made by the bank.
All the non current assets are the items which are the part of the total investments but not the part of the working capital
Fixed Assets is one the example which is the part of the total investment but not the part of the working capital.
The second example is the Investments in deferred revenue expenditure...
Working capital + Fixed assets = total investment
Working Capital = Current Assests - Current Laibilities
Invested capital represents the total cash investment
Working capital is the difference between current assets and current liabilitie.
working capital = current assets - current liabilitie
Fixed capital investments serve strategic objectives -- that is, long-term plans of the business. The benefits of fixed capital investments are spread over several years. In contrast, working capital investments serve operational objectives -- that is, day-to-day activities of the business. Therefore, the scope of a fixed capital investment stretches several years ahead, while that of a working capital investment is limited specific accounting periods or fiscal years.
1,Working Captal dealt with CA-CL
2.Total Investment Meants Total Asset - Total liablity (except Share Capital ).....
3.Difference between two Working capital shows company Financial Position on particular time whereas Total investment shows Share holders value.
Current & Non-Current portions of Assets & Liabilities.
Working capital- Current Assets Less Current Liabilites
Total Investment- Total Assets (Current & Non-Current) Less Total Liabilities (Current & Non-Current)
The difference is that investment is considered as Noncurrect Asset, For Example : Investment in subsidiary or associates on the other hand Wroking Capital is calculated as Net Diff b/w Current Asset & Current Liabilities.