It is broadly classified into two- permanent working capital and variable working capital.
1)Permanent Or Fixed Working Capital :- It is the minimum amount of working capital
required to ensure effective utilization of fixed assets and support the normal operation of the
business. It is again divided into two.
(A) Initial Working Capital- It is the capital with which the project is commenced.
(B) Regular Working Capital: - It is the minimum amount of the liquid capital to
keep up the circulating capital from cash to inventories, to receivables and back again
to cash.
2) Variable Working Capital: - This is the additional capital needed to meet seasonal and
special needs. It is again divided into two.
(A) Seasonal Working Capital: - It refers to the additional working capital required
during busy seasons.
(B) Special Working Capital: - It may be required to carry on a special sales
campaign or financing slow moving stock or financing a period of strike or lockout etc.
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