What is the purpose of an annual report?

The purpose of an annual report is to summarize a company's financial performance over the year. This document serves as a comprehensive overview that includes financial statements such as the income statement, balance sheet, and cash flow statement. Additionally, the report often highlights key achievements, strategic goals, and challenges faced during the year.

Annual reports are crucial for shareholders, investors, and stakeholders because they provide transparency regarding the company's financial health and operational results. Such information allows stakeholders to assess the company's performance and make informed decisions regarding their investments or involvement.

Other options, such as product pricing or employee responsibilities, do not relate to the financial overview that annual reports aim to provide. Similarly, tracking inventory levels is a more operational concern that would not typically feature in an annual report's financial summary.