Fixed Capital - Factors Which Influence Fixed-capital Requirements

Factors Which Influence Fixed-capital Requirements

  • The nature of the undertaking: the nature of the business certainly plays a role in determining fixed capital requirements. A florist, for example, needs less fixed capital than a vehicle-assembly factory.
  • The size of the undertaking: a general rule applies: the bigger the business, the higher the need for fixed capital.
  • The stage of development of the undertaking: the requirement of capital for a new undertaking is usually greater than that needed for an established business that has reached optimum size.

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