EXERCISE 1–1 Refer to the information in Exercise 1–3 about Mixon Company. The company’s income statements for the years ended December 31, 2006 and 2005 show the following:

2006 2005 Sales . . . . . . . . . . . . . . . . . . . . . . $672,500 $530,000 Cost of goods sold . . . . . . . . . . . . $410,225 $344,500 Other operating expenses . . . . . . 208,550 133,980 Interest expense . . . . . . . . . . . . . 11,100 12,300 Income taxes . . . . . . . . . . . . . . . . 8,525 7,845 Total costs and expenses . . . . . . . . . . . . . . . . . . . (638,400) (498,625)

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,100 $ 31,375 Earnings per share . . . . . . . . . . . . . . . . . . . . . . . $ 2.10 $ 1.93 Required:

For the years ended December 31, 2006 and 2005, assume all sales are on credit and then compute the following:

(a) collection period,

(b) accounts receivable turnover,

(c) inventory turnover, and

(d ) days’ sales in inventory. Comment on the changes in the ratios from 2005 to 2006.