Permanent Working Capital is to carry on business a certain minimum level of working capital is necessary on a continuous and uninterrupted basis. For all practical purposes, this requirement will have to be met permanently as with other fixed assets. This requirement is referred to as permanent working capital.
difference between variable working capital and permanent working capital.
|
Particulars |
Permanent Working Capital |
Temporary Working Capital |
|
1) Required level of amount |
A certain minimum level of
working capital is necessary to
carry the business |
Any
amount over and above the permanent level of
working capital is needed |
|
2) Level of necessity |
It is necessary on a continuous
and uninterrupted basis |
Temporarily required in case of increase
of production and sales |
|
3) Pattern of
necessity |
This requirement will have to
be
met permanently |
The necessity in on fluctuating
or variable position |
|
4) Nature of
working capital |
The working capital cost and investment is constant |
The working capital cost and investment is variable |
|
5) Outcome
level of firm |
It make the minimum outcome
as well as growth of the firm |
It make a extra ordinary
production outcome of the firm |