A fixed capital investment represents the acquisition and maintenance of long-term assets. It can be some tangible asset, such as a building, or an intangible asset, such as an intellectual property.
However, there is more to fixed capital investment. Below are some of key bits of information worth knowing about this useful business solution:
• Fixed capital investments are usually used to launch and conduct businesses. They also tend to depreciate over a long period of time (up to 20 years or so) on the company’s accounting statements.
• Although they are known to depreciate over time, they do not depreciate the same way as other types of investments or solutions. There are specific types of investments that devalue faster than others. Communications equipment or devices are the perfect example of investments that devalue quickly because there is such a fast turnover of technology for these. Nearly every year, new features and functionalities that are designed to enhance business operations are introduced in the market. Company vehicles are also examples of assets that depreciate quite fast since the value of brand new company vehicles dips by as much as 40% within the year of purchase.
• Fixed capital investments, on the other hand, do not devalue quickly. In certain instances, they may even increase in value. The best examples of this type of investment are real estate properties, such as the company’s land and office buildings.
However, there is more to fixed capital investment. Below are some of key bits of information worth knowing about this useful business solution:
• Fixed capital investments are usually used to launch and conduct businesses. They also tend to depreciate over a long period of time (up to 20 years or so) on the company’s accounting statements.
• Although they are known to depreciate over time, they do not depreciate the same way as other types of investments or solutions. There are specific types of investments that devalue faster than others. Communications equipment or devices are the perfect example of investments that devalue quickly because there is such a fast turnover of technology for these. Nearly every year, new features and functionalities that are designed to enhance business operations are introduced in the market. Company vehicles are also examples of assets that depreciate quite fast since the value of brand new company vehicles dips by as much as 40% within the year of purchase.
• Fixed capital investments, on the other hand, do not devalue quickly. In certain instances, they may even increase in value. The best examples of this type of investment are real estate properties, such as the company’s land and office buildings.
• Fixed capital investments consist of the acquisition of tools and equipment necessary for day-to-day operations and the real estate properties where goods are produced and stored. However, they do not include the materials used in the production of goods as these are not retained by the company.
• Generally, the amount of fixed capital differs from industry to industry. There are companies that naturally require much higher fixed capital investment than others. These enterprises include telecommunications providers, oil firms, and engineering and manufacturing companies. Meanwhile, businesses that only require limited fixed capital are those that belong to the service industry, such as accounting and law firms and travel agencies, which require more affordable, compact tools, devices and regular office appliances or equipment.
• Finally, procuring fixed capital can take a significant amount of time. As such, it is worthwhile to consider working with a really good and reputable bank or financing institution so that you can successfully avoid any risk of financial losses since they offer a variety of tried and tested effective strategies.
By Jane Kent, a business planning consultant. She got additional resource information regarding fixed capital investment from HSBC's website.
• Generally, the amount of fixed capital differs from industry to industry. There are companies that naturally require much higher fixed capital investment than others. These enterprises include telecommunications providers, oil firms, and engineering and manufacturing companies. Meanwhile, businesses that only require limited fixed capital are those that belong to the service industry, such as accounting and law firms and travel agencies, which require more affordable, compact tools, devices and regular office appliances or equipment.
• Finally, procuring fixed capital can take a significant amount of time. As such, it is worthwhile to consider working with a really good and reputable bank or financing institution so that you can successfully avoid any risk of financial losses since they offer a variety of tried and tested effective strategies.
By Jane Kent, a business planning consultant. She got additional resource information regarding fixed capital investment from HSBC's website.