What are the types of working capital?
The types of Working Capital are:-
- Gross working capital:- Gross working capital is the capital which is actually used for each of the current assets. The overall value of the current assets will equal the gross working capital.
- Net Working Capital:- Networking capital is defined as the surplus of current assets over the current liabilities. Net Working Capital = Total Current Assets – Total Current Liabilities
- Permanent Working Capital:- Permanent working capital is the amount of working capital which should be in cash or in the current assets for pursuing the activities of the business
- Temporary Working Capital:- Sometime, it might be possible that a business owner has to pay fixed liabilities, then at that point of time the owner needs working capital which is much more than the permanent working capital, and then this excess amount will be temporary working capital