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BRILLIANT’S Working Capital Management 139

Analysis {díbofU
Regular analysis of a company's currents EH$ H§$nZr Ho$ dV©_mZ AgoQ²>g VWm bm`{~{bQ>rO H$m
assets and liabilities is necessary to maintain
{Z`{_V {díbofU EH$ à^mdr d{Hª$J H¡${nQ>b _¡ZoO_|Q> ñQ´>oQ>oOr
an effective working capital management
strategy. An effective working capital mana- ~Zm`o aIZo Ho$ {bE Amdí`H$ h¡& EH$ à^mdr d{Hª$J H¡${nQ>b
gement strategy will take into account _¡ZoO_|Q> ñQ´>oQ>oOr AZno{jV KQ>ZmAm| H$m Ü`mZ aIVr h¡
unforeseen events such as changes in the O¡go {H$ ~mOma VWm à{V`moJr H$s J{V{d{Y`m| _| n[adV©Z&
market and competitor’s activities. Finding
{dH«$` Am` ~‹T>mZo VWm AH$mC§Q²>g [agrdo~b na EH${ÌV
ways of increasing sales income and collecting
on accounts receivable will also improve a H$aZo Ho$ VarHo$ ImoOZm EH$ H§$nZr H$s d{Hª$J H¡${nQ>b ^r
company's working capital. Companies with gwYmaoJm& nm°[O{Q>d H¡$e âbmo dmbr H§$nZrO {dñVma Adga
a positive cash flow can take advantage of
H$m bm^ bo gH$Vr h¢ Š`m|{H$ do EŠgQ>Z©b \$m`Z|qgJ na
expansion opportunities as they arise without
having to rely on external financing. {Z^©a hþE {~Zm CR>Vr h¢& 

PERMANENT AND VARIABLE WORKING CAPITAL
na_mZo|Q> VWm do[aE~b d{Hª$J H¡${nQ>b

Q.19. Explain the Concept of Permanent and Temporary Working Capital.
na_mZ|Q> VWm Q>oånaar d{Hª$J H¡${nQ>b H$s AdYmaUm g_PmB`o&

Permanent and Temporary Working ñWm`r Am¡a AñWm`r d{Hª$J H¡${nQ>c
Capital

The level of working capital requirement d{Hª$J H¡${nQ>c H$s Amdí`H$Vm H$m ñVa V` Zht
can not be fixed because it changes with the {H$`m Om gH$Vm Š`m|{H$ EpŠQ>{dQ>rO _| n[adV©Z hmoZo na
change in activities. However, there is always BgH$s Amdí`H$Vm _| ^r n[adV©Z hmoVm h¡& hmbm±{H$ h_oem
a minimum level of current assets which is H$aÝQ> AgoQ²>g H$m EH$ Ý`yZV_ ñVa hmoVm h¡ {OgH$s
continuously required by the firm. It is called \$_© H$mo Amdí`H$Vm n‹S>Vr h¡& Bgo ñWm`r `m pñWa
permanent or fixed working capital. It is d{Hª$J H¡${nQ>c H$hVo h¢& `h H$ånZr _| ñWm`r AgoQ²>g
similar to the fixed assets in a company. If there Ho$ g_mZ hr hmoVr h¡& `{X CËnmXZ Am¡a {~H«$s _| H$moB©
is any change in production and sales, the need n[adV©Z AmVm h¡ Vmo d{Hª$J H¡${nQ>c H$s Amdí`H$Vm _|
for a working capital can be changed. ^r n[adV©Z hmoVm h¡&
The extra working capital required to ~Xbo hþE CËnmXZ Am¡a {dH«$` Ho$ {bE Amdí`H$
support the changing production and sale, is A{V[aº$ d{Hª$J H¡${nQ>c AñWmB© `m n[adV©Zerc d{Hª$J
called temporary or variable working capital.
H¡${nQ>c H$hbmVr h¡& ñWm`r Am¡a n[adV©Zerc XmoZm| àH$ma
Both kinds of working capital - permanent and
Ho$ d{Hª$J H¡${nQ>c {~OZog H$mo gwJ_Vmnyd©H$ MbmZo Ho$
temporary are needed to run the business
{bE Amdí`H$ hmoVr h¢& ñWm`r Am¡a n[adV©Zerc d{Hª$J
smoothly. The difference between permanent
and variable working capital can be under- H¡${nQ>c H$m A§Va {ZåZ {MÌ H$s ghm`Vm go g_Pm Om
stood with the following figure: gH$Vm h¡: