Circulating Capital

Circulating Capital
The portion of an organization's investment that is continually used and replenished in ongoing operations. Circulating capital can consist of operating expenses, raw material stock, inventories of finished goods or physical capital on hand. Circulating capital is the opposite of constant (fixed) capital.

By calculating circulating capital you will get a better understanding of how much capital is tied up to generate profit. Fixed capital, on the other hand, refers to funds that are tied up, but aren't generating much profit. For example, a very small percentage (or none) of the cash tied up in a building, such as a warehouse, can be associated with the production of goods and therefore profits.

Investment dictionary. . 2012.

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  • Circulating capital — refers to physical capital and operating expenses, i.e., short lived items that are used in production and used up in the process of creating other goods or services. This is roughly equal to Intermediate consumption. It includes raw materials,… …   Wikipedia

  • circulating capital — ➔ capital * * * circulating capital UK US noun [U] ACCOUNTING ► WORKING CAPITAL(Cf. ↑working capital) …   Financial and business terms

  • circulating capital — capital cap i*tal (k[a^]p [i^]*tal), n. [Cf. L. capitellum and capitulum, a small head, the head, top, or capital of a column, dim. of caput head; F. chapiteau, OF. capitel. See {chief}, and cf. {cattle}, {chattel}, {chapiter}, {chapter}.] 1.… …   The Collaborative International Dictionary of English

  • circulating capital — index principal (capital sum) Burton s Legal Thesaurus. William C. Burton. 2006 …   Law dictionary

  • circulating capital — noun : capital consumed in the process of production (as fuel, power, and raw materials) contrasted with fixed capital * * * the portion of capital goods that consists of goods in process, inventories of finished goods, and raw materials. Also… …   Useful english dictionary

  • circulating capital — the portion of capital goods that consists of goods in process, inventories of finished goods, and raw materials. Also called circulating capital goods. Cf. fixed capital. [1770 80] * * * …   Universalium

  • circulating capital — capital which is regularly changes hands, capital which regularly changes from one form to another …   English contemporary dictionary

  • circulating capital — /ˌsɜkjəleɪtɪŋ ˈkæpətl/ (say .serkyuhlayting kapuhtl) noun Finance capital which has been used to acquire assets intended to be sold or resold at a profit (opposed to fixed capital) …  

  • circulating capital — See capital …   Dictionary of sociology

  • circulating capital — /ˌsɜ:kjυleɪtɪŋ kæpɪt(ə)l/ noun capital in the form of cash or debtors, raw materials, finished products and work in progress which a company requires to carry on its business …   Dictionary of banking and finance

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