MANAGEMENT

Detailed explanation-1: -The amount of current assets that varies with seasonal requirements is referred to as Temporary working capital.

Detailed explanation-2: -Seasonal Variable Working capital: Seasonal working capital is the additional amount which is required during the active business seasons of the year. Raw materials like raw-cotton or jute or sugarcane are purchased in particular season. The industry has to borrow funds for short period.

Detailed explanation-3: -What Is Working Capital? Working capital, also known as net working capital (NWC), is the difference between a company’s current assets-such as cash, accounts receivable/customers’ unpaid bills, and inventories of raw materials and finished goods-and its current liabilities, such as accounts payable and debts.

Detailed explanation-4: -Current assets include cash, accounts receivable and inventory. Current liabilities include accounts payable, taxes, wages and interest owed. Working capital is a financial metric calculated as the difference between current assets and current liabilities.

Detailed explanation-5: -Permanent working capital refers to a level of current assets which is to be maintained and vital for the firm to carry its business regardless of the operation levels. While Temporary working capital refers to the working capital which is over and above the permanent working capital.