What is the purpose of segment reporting?

The purpose of segment reporting is to break down financial information for different parts of a business. This approach allows stakeholders, such as investors and management, to gain insights into the performance of individual business segments or units. By presenting financial results for each segment separately, companies can disclose how different areas contribute to overall profitability, operations, and strategic direction.

Segment reporting enhances transparency by providing detailed information that is useful for decision-making. This breakdown helps in identifying which segments are performing well and which may require attention or restructuring. It ultimately aids in assessing the overall health of the company by allowing for a more granular view of the financial data, enabling better strategic planning and resource allocation.

While enhancing transparency in executive compensation or combining all results into one statement serves different reporting purposes, segment reporting specifically focuses on providing detailed information on various business facets, making option B the most accurate representation of its intent.