What is temporary working capital?
A) the amount that a firm must keep invested in its short-term assets to support its continuing operations
B) the difference between the actual level of investment in short-term working capital needs and its permanent working capital investment
C) the amount that a firm keeps invested in its short-term assets to support its continuing operations which are financed by short-term debt
D) the amount that a firm keeps invested in its short-term assets to support its continuing operations which are financed by long-term debt

Question

Quizplus · Accepted Answer

Temporary working capital refers to the fluctuating additional amount of working capital needed by a firm beyond its permanent working capital. It varies with seasonal demands, production cycles, or specific short-term needs, unlike permanent working capital which is a constant investment in short-term assets to support ongoing operations.

What Is Temporary Working Capital