lion corporation is concerned about a potential accumulated earnings tax liability it accumulates ep for w

Lion reports the following data in its current year income statement:
Sales ……………………………………………………… $3,200,000
Cost of goods sold ………………………………………… 1,500,000
Purchases ………………………………………………….. 1,200,000
Operating expenses (other than cost of goods sold) ……… 1,000,000
Included in operating expenses are depreciation of $150,000 and federal income taxes of $100,000 (assume paid at one time rather than in installments).
a. What is Lion’s operating cycle in days? As a decimal?
b. What is Lion’s reasonable working capital amount as determined under the Bardahl formula?
c. What steps must Lion take to justify accumulating earnings that exceed the amount prescribed under the Bardahl formula?