Which company is most likely to need external financing?

The selection of the company with the lowest cash provided by investing activities as the one most likely to need external financing is grounded in the understanding of cash flow statements and their implications for a company's financing needs.

When a company has low or negative cash flows from investing activities, it suggests that it is not generating sufficient cash from its investments, which could indicate limited growth opportunities or even inefficiencies in its investment strategy. Companies typically rely on cash from their operating activities to fund their investments. If a company is not generating enough cash from investing, it may struggle to finance its capital expenditures, make new investments, or maintain its operations without seeking additional funding.

In contrast, companies with substantial cash reserves or strong cash flows from operating activities might have enough internal funds to support their operations and investments without needing external financing. Similarly, companies with significant cash from investments are likely to be in a stronger financial position and less reliant on outside funding sources.

Therefore, it is the combination of low cash generated from investing activities that highlights a greater potential need for external financing to support ongoing operations and future growth initiatives.