Circulating capital

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Circulating capital is a term used by classical economists such as David Ricardo and others such as Karl Marx. It refers to a kind of physical capital, i.e., short-lived items that are used in production and used up in the process of creating other goods or services. It includes raw materials, intermediate goods, and inventories (working capital). It is contrasted to fixed capital.

Therefore, circulating capital is a component of the technical capital that participates and integrally consumes in a single cycle of production. It always needs replacing at every cycle (raw materials, basic and intermediate materials, combustible, energy…). In accounting, the circulating capital reflects under the form of circulating actives.

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