A Fortune 500 company is an enterprise listed in the annual ranking of the 500 largest US companies as compiled by Fortune magazine. The ranking is determined based on the total annual revenues for their respective fiscal years. This list has significant implications for the business landscape, showcasing the economic power and influence of leading corporations.
How Companies Are Ranked in the Fortune 500
Revenue Calculation
The primary criterion for inclusion in the Fortune 500 list is the total revenue generated by a company during its fiscal year. This includes:
- Total sales: Which encompass goods sold, services rendered, and any other operational income.
- Net revenues: After deductions for returns and allowances.
Data Sources
- Company Reports: Revenue data is sourced from publicly available financial statements and fiscal reports.
- Regulatory Filings: Additional data may be obtained from documents filed with the Securities and Exchange Commission (SEC).
Ranking Methodology
- Revenue Basis: The companies are ranked solely on their reported revenue figures.
- Consistency and Accuracy: Supplementary auditing ensures reported figures align with statutory filings.
Types of Companies in the Fortune 500
Industry Variation
- Technology Giants: Companies like Apple, Microsoft, and Amazon.
- Retail Behemoths: Walmart and Costco.
- Financial Institutions: Banks such as JPMorgan Chase and Goldman Sachs.
- Healthcare Providers: Firms like UnitedHealth Group and CVS Health.
Public vs. Private
Most companies on the list are publicly traded, though privately held firms with significant revenues also qualify.
Special Considerations
Bias and Criticism
- Economic Cycles: Rankings may not reflect longer-term stability or profitability.
- Industry Fluctuations: Sudden changes in industry trends can drastically affect rankings.
- Geographic Limitation: Being US-focused, it doesn’t include global corporate giants headquartered outside the US.
Benefits of Being a Fortune 500 Company
- Market Credibility: Inclusion enhances corporate prestige and investor confidence.
- Economic Influence: Companies influence economic policies and corporate governance practices.
Historical Context
Origins
- First Publication: The first Fortune 500 list was published in 1955.
- Evolution: The criteria and methodology have evolved to adapt to economic and market changes.
Long-standing Members
Companies like General Motors, ExxonMobil, and General Electric have been long-term staples, illustrating long-term success and influence.
Applicability and Impact
Corporate Benchmarking
- Performance Measurement: Companies use it as a benchmark for measuring revenue performance.
- Strategic Planning: Inclusion can influence long-term strategic goals and investor relations.
Comparison with Related Terms
- Fortune Global 500: A similar list that ranks the top 500 corporations globally.
- Forbes Global 2000: Ranks companies based on a mix of sales, profits, assets, and market value.
FAQs
How is the Fortune 500 list data verified?
Do companies outside the US appear in the Fortune 500?
Can a company appear on the list more than once?
References
- Fortune Magazine Official Website
- “The History of the Fortune 500”. Fortune Magazine Archives.
- U.S. Securities and Exchange Commission Filings.
Summary
The Fortune 500 list serves as a barometer of corporate success in the United States, ranking companies based on their revenue. By understanding the methodology and impact of this ranking, businesses and stakeholders can better appreciate the economic landscape and the importance of revenue generation in achieving corporate prominence.
