Final answer:
Financial statements can provide all the information needed to understand the company's financial position, profitability, and operating, investing, and financing activities.
Step-by-step explanation:
Financial statements statements are crucial as they contain comprehensive data on a company's performance and health. For established firms, this information is particularly valuable because, compared to new firms, there is less dependency on the knowledge of individual managers due to the availability of structured financial information.
This explains why more established firms tend to attract investment from external parties such as bondholders and shareholders who rely on these financial statements rather than personal knowledge of the company's management. Broadly, this highlights the importance of transparency and the role of imperfect information in financial markets.