Which statement best describes how a company met its predominant financing need?

The statement that the company met its predominant financing need through the funding of capital expenditures mostly by long-term debt effectively highlights a common practice in financial management where organizations seek to align the financing of large, long-term investments with stable, long-term funding sources. By using long-term debt for capital expenditures, the company can match the duration of its liabilities with the expected lifespan of the assets it acquires. This approach provides greater financial stability and ensures that the costs associated with these investments can be spread out over time, mirroring the cash flows that the assets will generate.

Long-term debt typically has lower interest rates compared to short-term debt and can offer more favorable repayment terms, which is particularly advantageous when financing substantial projects. This strategy minimizes cash flow pressure, enabling the company to utilize its operating cash flow for day-to-day operations and working capital needs while ensuring that capital projects are adequately funded.

In contrast, the other statements do describe situations that involve financing needs but do not capture the essence of meeting predominant financing needs in the same effective manner. For instance, while suffice cash flow can support investing activities, it does not indicate a strategic financing decision. Similarly, using short-term debt for growth in receivables and inventory can lead to financial instability if not managed