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Types Of Working Capital

TYPES OF WORKING CAPITAL:

Working Capital may be classified into three important types on the basis of time.

(1). Permanent Working Capital

(2). Temporary Working Capital

(3). Semi Variable Working Capital

Permanent Working Capital

It is also known as Fixed Working Capital. It is the capital; the business concern must maintain certain amount of capital at minimum level at all times. The level of Permanent Capital depends upon the nature of the business. Permanent or Fixed Working Capital will not change irrespective of time or volume of sales.

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Temporary Working Capital
It is also known as variable working capital. It is the amount of capital which is required to meet the Seasonal demands and some special purposes. It can be further classified into the following:

i. Seasonal Working Capital
ii. Special Working Capital.

The capital required to meet the seasonal needs of the business concern is called as Seasonal Working Capital. The capital required to meet the special exigencies such as launching of extensive marketing campaigns for conducting research, etc.

Semi Variable Working Capital
Certain amount of Working Capital is in the field level up to a certain stage and after that it will increase depending upon the change of sales or time.

Types Of Working Capital Types Of Working Capital Reviewed by Ikpokolo Francis on Sunday, July 09, 2017 Rating: 5

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