One of the questions in my interview by an audit firm is...What are the types of Working Capital? But when i referred my C.A Final books there is nothing like types in working capital.......
One of the questions in my interview by an audit firm is...What are the types of Working Capital? But when i referred my C.A Final books there is nothing like types in working capital.......
Good job Prabeer, I make your reply simplified
Permanent working capital
= minimum amount of investment in all current assets which is required at all times to carry out minimum level of business activities.
Permanent working capital = core current assets
Main features:
1. Amount of permanent working capital remains in the business in one form or other.
2. There is a positive correlation between the amount of permanent working capital and the size of the business.
3. Permanent working capital is permanently needed therefore it should be financed through long-term funds.
Temporary working capital:
The amount of temporary working capital fluctuates depending upon the changes in the production and sales.
Temporary working capital = fluctuating working capital = variable working capital
thanks for pasting, somani sir
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