Making a list doesn’t necessarily mean you have a lot of work ahead of you. Conversely, making it to the list may mean you have been recognized for a noteworthy achievement.
A performer may receive an Oscar nomination, a writer might land on The New York Times best-seller list, and a company might be named to the Fortune 500. You have a significant to-do list if you wish to see your company get that kind of recognition.
What is a Fortune 500 company?
The list’s most obvious meaning is rather simple and unambiguous. The prestigious business magazine Fortune rates American companies yearly based on their previous fiscal year’s sales revenue.
The Fortune 500 is a ranking of the 500 top businesses by that criterion, while the Fortune 1000 is a lengthy list that includes the remaining 500. Despite being a significant achievement in itself and a step toward becoming a Fortune 1000 company, making it to the list does not confer the same level of bragging rights as being on the shorter list.
Record History
When the first Fortune 500 list was published in 1955, the American economy depended heavily on manufacturing commodities. It seemed logical at the time to restrict the list to manufacturing, mining, and energy companies. Even then, the restriction eliminated several big companies. During the next decades, the service sector grew in prominence, and by leaving it off the Fortune 500 criteria, the list lost its value as an indicator of the American economy. In 1994, the list’s parameters were changed to include the service industry, which allowed growing giants like Walmart to seize the limelight. In retrospect, it is necessary to make this decision since technology has blurred the lines between traditional sectors. For instance, Apple and IBM trademarks are still present on some products, but software and services are now the core of both companies’ operations.
The magazine, formerly published monthly, now has a substantial online presence in addition to 16 issues being produced annually. It is readily available online; you only need a dependable connection to view the list online.
Eligibility
Fortune magazine wants its list to rank American corporations instead of companies that operate in America, and the official criteria reflect that. Being an American corporation means several things, according to the Fortune 500 definition. Incorporating and operating a business in the United States is a logical place to start. Mutual insurance companies and credit unions would fit this criterion; nevertheless, in order to be qualified, they must submit financial statements to a government authority. The enterprises can be public, private, or even cooperatives. Companies that don’t file reports with the government, as well as US companies that combine with another organization—domestic or foreign—to file reports—are also excluded.
The annual salary
The other equation component, the revenue reported by the companies under investigation, is subject to restrictions. The first factor used to rank the firms is the income they reported to the appropriate government agencies for their most recent fiscal year. Because not all firms utilize the same fiscal year, the comparison isn’t quite similar, but it’s fairly near. The parent company’s earnings are increased by the revenues of any listed companies’ subsidiaries. The list also includes the after-tax earnings of each firm, although the rankings are unaffected by them. It is extremely possible to make an annual loss, even among the companies on the list with the largest overall income. Having the resources to get through difficult times is one of the benefits of running a Fortune 500 company.
Various other listings
Of course, there are more lists of this nature besides the Fortune 500. There are more financial-related newspapers and companies with their own. Fortune publishes a global edition of its list that contrasts American companies with those from foreign nations.
The two other important rankings in the US are the Standard & Poor’s 500 and the Dow Jones Industrial Average. Both are important indicators of the general health of the American economy, but they are not as comprehensive as the Fortune 500 since they exclude private firms and only include those that are publicly traded. The large, publicly traded companies in the S&P index were carefully picked to paint a true picture of the economy as a whole.
They are compared based on their total market capitalization, which is determined by dividing the stock price by the total number of outstanding shares. The Dow, which consists of just 30 firms and weights them based on their price, has even fewer stocks than that. You may argue that the Fortune 500 is a more accurate indicator of the status of the economy since it places a greater emphasis on revenues rather than stock price or market value.
Conclusion
If you want your company included on the Fortune 500, it takes more than just hitting a particular revenue goal. There is no threshold for inclusion in the Fortune 500 or simple dollar-and-cents metric to measure performance. The companies on the list are there because they do better than everyone else, and the exact sales standard varies yearly.
