Which type of capital is used for long-term physical assets like machinery?

• A. Fixed Capital / Physical Capital
• B. Working Capital
• C. Financial Capital
• D. Start-up Capital

Answer: (A)

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.