EMS Financial Literacy Practice Exam

Fixed capital, also called physical capital, refers to durable assets that are used in production over many years. Machinery fits this category because it remains in use beyond a single year and is depreciated over time on the balance sheet. These long‑lasting assets expand and sustain a company’s productive capacity, rather than covering short-term needs.

Working capital covers the funds needed to run daily operations—things like cash, inventory, and accounts receivable—so it’s not about the long-lived assets themselves. Financial capital is a broad term for the funds used to acquire assets or run the business, not a specific asset type. Start-up capital refers to money raised to start a new venture, again not the category of an asset in use.

So for long-term physical assets such as machinery, the appropriate label is fixed capital.