Lion Corporation is concerned about a potential accumulated earnings tax liability. It accumulates E&P for working capital necessary to conduct its manufacturing business. The following data appear in its current year balance sheets.

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?

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BeginningFPeak Balance Balance Balancefor the Year Accounts receivable $300,000 $400,000 $400,000 375,000 20,000 Account 2 40,000 300,000 150,000 200,000 Accounts payable