TYPES OF WORKING CAPITAL

Working capital can be split up into two categories on the basis of time. They are Permanent Working Capital and Temporary or Variable Working capital Permanent Working Capital relates to that minimum amount of investment in current assets which is necessary at all times to carry on minimum level of business activities. It signifies the current assets required on a continuing basis over the whole year, and hence should be financed out of long term funds.  Tandon Committee has related to this kind of Working capital as 'Core Current Assets'.

Temporary Working capital defines the additional current assets required at different times through the operating year.