Question a: Limassol Ltd company trades one product which has purchase price 225 per unit, its demand for the period is 100 units, the ordering cost 375 and the holding cost is 20% of the purchase price. The supplier of the company offers 2.5 % discount for order of 75 units, 5% discount for order of 100 units and 7.5% discount for order of 250 units. Required: Calculate the order in units that minimize the total cost (10 marks)

Question b: Explain the symptoms and consequences of overcapitalization and overtrading (2 marks)

Question c: Nicosia Ltd needs 15 million in finance to be easily spread over the coming year, which Paphos Ltd will supply. The standing bank fee of for each transaction is 300. The interest cost of holding cash is 9% per year. Required: Calculate how much should Nicosia Ltd draw down at a time? (2 marks)

Question d: Describe practices to deal with liquidity problems (2 marks