Consider the following sets of financial statements and answer the questions that follow:

Answer the following questions:
a. To which firm would you prefer to lend money? Why?
b. In which firm would you prefer to invest? Why?

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FINANCIAL STATEMENT S, Harry's Company BALANCE SHEET, as ofyear-end 2012 INCOME STATE MENT 2012 ASSETS Cash and marketable securities Accounts receivable Inventory Total Current assets Plant & equipment, gross Accumulated depreciation Net ixed assets Total assets LIABILITIES AND EQUITIES Short-tem bank loans Accounts payabl Accruals Total Current liabilities Net sales S512,305 S45,183 Cost of goods sold Gross profit Admin and selling exp Depreciation Miscellaneous expenses S185,978 529,930 S117,948 S148,746 Total operating exp 128,886 Interest on STloans Interest on LT loans Interest on mortgage S54,216 35,591 Total interest 113,059 521,082 Before-tax eamings Taxes Net income $128,935 38,680 Long-tem bank loans Mortgage Total Long-term debt Total liabilities Common stock 7 milion shares Retained eamings 524.870 S137,929 44,538 Dividends paid Addition to retained earnings E PS (7,000,000 shares) S0 $90,254 106,885 Total liabilities and Equity FINANCIAL STATEMENT S, Joe's Company EALANCE SHEET, as ofyear-end 2012 INCOME STATE MENT 2012 AS SETS Cash and marketable securities Accounts receivable Inventory Total Current assets Plant & equipment, gross Accumulated depreciation S512,305 398,844 5113,461 $29,930 Net sales S105,183 21,398 Cost of g0ods sold Gross profit Admin and selling exp Depreciation Miscellaneous expenses S207,948 558,746 Total operating exp Net ixed assets Total assets LIABILITIE S AND EQUITIES Short-tem bank loans Accounts payable 536,866 5244,814 S71,835 Interest on ST loans Interest on LT loans nterest on mortgage otal interest Before-tax eamings Total Current liabilities Long-tem bank loans Mortgage Total Long-term debt Total liabilities Common stock ? million shares) S121,538 Retained eamings Total equity Total liabilities and equity 36,059 $21,082 Net income Dividends paid 560,929 Adtions to retained earnings $47,605 EPS (7,000,000 shares) S183,88 $244,814