Answers:
Temporary working capital: It refers to
the working capital that is required to produce extra units of products in case
of excess demand. However, the demand for the product may not always be high in
the market. However, when it increases, extra working capital is raised from
short-term sources. The temporary working capital is also known as fluctuating
working capital.
Permanent working capital: It refers to
the working capital that is required for smooth running of the business. The
permanent working capital is required on a daily basis for production and
payment of current liabilities. If an organisation fails to maintain permanent
capital, it will cease to exist in the long run.