Which document includes costs associated with long-term physical improvements?

The capital budget is specifically designed to outline the costs associated with long-term physical improvements and investments in assets such as buildings, infrastructure, and equipment. These expenditures are typically significant and not recurring on an annual basis. The capital budget details planned projects for the future, delineates funding sources, and allocates necessary funds to ensure these long-term improvements can be executed successfully.

In contrast, the operational budget focuses on the day-to-day running costs of an organization, covering expenses like salaries, utilities, and materials necessary for daily operations. Grant proposals are documents created to request funding for specific projects, including capital improvements, but they do not themselves provide a comprehensive overview of costs. An annual report serves as a summary of the organization's performance over the past year, highlighting achievements and financial status, but it does not specifically detail long-term physical improvements or their associated costs. Therefore, while the other options serve important functions within organizational finance, the capital budget is the most relevant document for capturing and planning for long-term physical improvements.