Capital formation refers to the creation or expansion of capital through savings, which are then invested in buildings, machinery, equipment, and other assets that produce goods and services, thereby contributing to economic growth.
A capital intensive business involves significant investment in fixed assets such as plant and machinery. These companies are regarded as high-risk investments, particularly in times of economic downturns, due to the high proportion of fixed costs.
Machines or major tools necessary to complete a given task. Equipment must be capitalized and written off over the appropriate depreciable life.
Fixed Capital refers to the amount of an organization's capital that is invested in its fixed assets, such as buildings, machinery, and equipment, which are essential for ongoing operations and production.
Fixed-asset investment refers to the expenditure on tangible assets that are likely to have a life of more than one year. These investments are essential for business operations and often include property, machinery, and infrastructure.
Manufacture refers to the process of making or fashioning products, often in large quantities, using hands or machinery. This term is commonly associated with industrial production, where raw materials are transformed into finished goods.
Producer goods, also known as intermediate or capital goods, are newer machinery and equipment bought for business use. These are durable goods used in business production to assist in the production of consumer goods and services.
The Production-Unit Method is a technique for calculating depreciation where the depreciation charge is based on the number of units produced by machinery over its useful life.
A Tangible Asset is any asset with physical existence, such as real estate, gold, or machinery.
Tangible assets are physical items that hold value and can be seen and touched, used by businesses to generate revenue.
