What is the purpose of a business's annual report?

The purpose of a business's annual report is to provide a comprehensive overview of the business's performance and strategy over the past year. This document typically includes information on financial results, operational achievements, and strategic plans moving forward. By summarizing key metrics such as revenue, profits, and expenses, the annual report allows stakeholders—including investors, employees, and customers—to assess the health and direction of the business.

Moreover, annual reports often include management's commentary, which provides insight into the company's strategic goals and objectives for the future. This contextual framework helps stakeholders understand not only how the company has performed but also how it plans to navigate challenges and capitalize on opportunities in the coming years.

In contrast, while highlighting employee achievements may be a part of the report, it is not its primary purpose. Similarly, detailing daily operations or identifying competitors are typically not the primary focus of an annual report; these elements might be covered in other business documents or reports designed for different purposes.