The Fortune 500 is an annual list published by Fortune magazine that ranks the 500 largest U.S. industrial (manufacturing) corporations by total revenue for their respective fiscal years. The list has come to be considered a definitive ranking of the top U.S. companies in terms of size and market dominance.
Historical Context
The Fortune 500 list was first created in 1955 by Edgar P. Smith, a Fortune editor, and it has been published annually since then. The aim was to provide a clear and measurable way to showcase the achievements of the largest corporations in the United States.
Applicability and Importance
Companies that make it to the Fortune 500 list typically benefit from increased visibility, prestige, and credibility within various industries. Being on the list is often seen as a mark of success and reliability, essential for attracting investors, customers, and top-tier employees.
Types of Rankings
Fortune 500
This list focuses on the 500 largest U.S. industrial corporations. The main criterion for ranking is the total revenue generated.
Fortune Service 500
In addition to the Fortune 500, Fortune magazine also publishes the Fortune Service 500. This list ranks the 500 largest U.S. nonmanufacturing companies, covering sectors such as banking, insurance, retail, and more.
Forbes 500
Forbes magazine offers another prominent ranking, the Forbes 500, which lists the 500 biggest U.S. publicly owned corporations. Unlike the Fortune 500, which exclusively considers total revenue, the Forbes list incorporates various factors, including market capitalization, sales, and profits.
Special Considerations
Methodology
The methodology of the Fortune 500 involves analyzing the annual revenue reported by public companies. However, it’s worth noting that the list does not account for companies’ profitability, market capitalization, or other financial metrics.
Variability
The list tends to change yearly due to factors like mergers, acquisitions, and changes in company revenues. New entrants and dropouts each year reflect the dynamic nature of the U.S. business landscape.
Examples
- Walmart: Consistently appears near the top of the list due to its high revenue generated from retail operations.
- Exxon Mobil: Frequently ranks high thanks to its significant revenue from the energy sector.
Comparisons with Other Rankings
Fortune 500 vs. Forbes 500
While both lists rank large U.S. corporations, the criteria for inclusion and ranking differ. The Fortune 500 is solely based on revenue, whereas the Forbes 500 considers additional factors like profits and market capitalization.
Global 500
Fortune also publishes a Global 500 list, ranking the world’s largest corporations irrespective of their country of origin, based on total revenue. This serves as a global counterpart to the U.S.-focused Fortune 500.
Related Terms
- Revenue: The total amount of money generated by a company’s operations before expenses.
- Market Capitalization: The market value of a company’s outstanding shares.
- Profitability: A measure of the financial gains a company makes, often assessed through net income.
- Fiscal Year: A one-year period that companies use for accounting purposes and preparing financial statements.
FAQs
What is the benefit of being on the Fortune 500 list?
How is the Fortune 500 list different from the Fortune Global 500?
What criteria are used for ranking in the Fortune 500?
References
- Fortune Magazine. (n.d.). Fortune 500 - 2023. Retrieved from Fortune
- Forbes Magazine. (n.d.). The Forbes 500. Retrieved from Forbes
- Smith, E. P. (1955). The Fortune 500: A New Idea in Business Rankings. Fortune.
Summary
The Fortune 500 list serves as a prestigious annual ranking of the largest U.S. industrial corporations, based on total revenue. It provides valuable insights into the business landscape and serves as a benchmark for corporate success. Alongside similar lists like the Fortune Service 500 and the Forbes 500, it offers a comprehensive view of the major players in the U.S. economy.
This detailed overview emphasizes the significance of corporate rankings in the broader context of finance and economics, offering readers a well-rounded understanding of these crucial metrics.
