Posted in Finance, Accounting and Economics Terms, Total Reads: 231
Definition: Circulating Capital
It refers to a firm’s capital which is constantly being used and replenished in the ongoing operations of the firm. It includes operating expenses( incurred in the normal course of operation of a firm), raw material stock( consumed in the production of final goods), finished goods inventories etc.
It is opposite of Fixed Capital. In contrast to fixed capital, a measure of tied up capital which is not generating much profits, it is a measure of tied up capital, which actually generated profits for the firm.