Circulating capital

Finer distinctions include raw materials, intermediate goods, inventories, ancillary operating expenses and (working capital).

Building on the work of Quesnay and Turgot, Adam Smith (1776) made the first explicit distinction between fixed and circulating capital.

[1] In his usage, circulating capital includes wages and labour maintenance, money, and inputs from land, mines, and fisheries associated with production.

"[5] Conventionally, (physical) capital assets held by a business for more than one year are regarded in annual accounting statements as "fixed", the rest as "circulating".

In modern economies such as the United States, roughly half of the intermediate inputs bought or used by businesses are in fact services, and not goods.