What does an annual report typically encompass?

An annual report is a comprehensive document that provides a detailed overview of a company's performance and financial status over the past year. It typically includes information about the company's yearly financial condition, examining aspects such as revenue, profits, and overall growth.

Additionally, the report outlines the company's progress toward its goals and objectives, illustrating how well the organization has performed in comparison to previous years and its stated expectations. This encompasses strategic insights and management's outlook for the future, allowing stakeholders, including investors, employees, and customers, to gauge the direction of the company.

While expenses, total sales, and employee benefits may be components of the overall financial narrative, they do not capture the broad scope of performance and strategic aims that the annual report is designed to address. Thus, the correct answer highlights the annual report's role in summarizing the financial health and future outlook of the organization.