# Permanent vs Temporary (Fluctuating) Working Capital
Both kinds of working capital are necessary to facilitate production and sales through the operating cycle.
## Permanent Working Capital
The base or core working capital — the minimum level of investment in current assets carried at all times to run day-to-day activities.
### Key Features
- Remains invested in the business at all times.
- Changes only if operations are scaled up or down permanently.
- Generally financed by long-term sources of finance.
## Temporary (Fluctuating / Variable) Working Capital
The additional working capital required over and above the permanent level.
### Key Features
- Required to finance short-term WC requirements that arise from fluctuations in sales volume.
- Also called variable or fluctuating working capital.
- Example: A garment retailer maintaining higher inventory before Diwali / Christmas.
## Comparison Table
| Aspect | Permanent | Temporary |
|---|---|---|
| Nature | Stable, base level | Fluctuating |
| Trigger to change | Permanent scale change | Seasonal/demand spikes |
| Financing | Long-term sources | Short-term sources |
| Example | Minimum stock always held | Seasonal stock for festivals |
## Diagram Concept
```
^ /\ /\ /\
WC | / \ / \ / \ <-- Temporary WC (fluctuates)
| / \ / \ / \
|/______\__/______\__/______\___ <-- Permanent WC (stable line)
+---------------------------> Time
```