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Fortune 500 Company: How Companies Are Ranked

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File Photo: Fortune 500 Company: How Companies Are Ranked
File Photo: Fortune 500 Company: How Companies Are Ranked File Photo: Fortune 500 Company: How Companies Are Ranked

What’s the Fortune 500?

Fortune 500 Company is a list of 500 of the largest firms in the United States produced by Fortune magazine annually. Company rankings are based on annual sales for each fiscal year. This list combines public and private firms with publicly available revenue statistics. Fortune 500 companies are regarded as prestigious.

Understanding Fortune 500 Company

Henry Robinson Luce created Fortune magazine in 1929. Since its inaugural publication the following year, the newspaper has become a top business publication worldwide. The journal publishes 16 editions annually and is heavily online.

Starting in 1955, the journal created a list of the most successful American enterprises, both public and private. Editor Edgar P. Smith invented it to assess American firms’ size and strength when the country’s economy was “the envy of the world.”The Fortune Industrial 500 became the Fortune 500.

The Fortune 500 study covers US-based corporations that file financial statements with government entities. This comprises governmental and private enterprises. Exceptions include private firms not filing financial statements with government agencies, overseas corporations, American companies consolidated by others, and those not reporting complete financial statements for three quarters of the current fiscal year. Company rankings in 2020 are based on total sales from their 10-K filings or similar financial records.

The S&P 500 Index includes two-thirds of the Fortune 500, so consider investing in an index fund.

Over time, the list has included over 1,800 American companies. The Fortune 500 list has altered drastically since its inception. Mergers, acquisitions, manufacturing transfers, and bankruptcy have removed firms from the list. Recessions can also affect many enterprises in specific industries. The Fortune 500 list can indicate economic strength or a rebound after difficult years.

Special Considerations

Walmart (WMT) topped the Fortune 500 for the ninth year in 2020. The corporation made $524 billion.5 Sales of $280.5 billion put Amazon (AMZN) in second place, up four points from 2019.6XOM; Apple (AAPL) and CVS Health (CVS) were third, fourth, and fifth, respectively, with $265 billion in revenues.7

The three most profitable corporations in 2020 were:

  • With $81.4 billion in net earnings, Berkshire Hathaway
  • Net profit: $55.2 billion for Apple
  • Microsoft (MSFT) earned $39.2 billion.

Dow (DOW), Baker Hughes (BKR), and Uber are newbies.

Fortune 500 History

The concept for the list originated from Edgar P. Smith, a Fortune assistant managing editor. From Smith’s concept came the popular yearly list. The initial Fortune 500 list exclusively included manufacturing, mining, and energy firms, excluding many well-known brands. A corporation needed $49.7 million in yearly revenue to make the list. General Motors (GM) led the 1955 Fortune 500 with $9.8 billion in revenues.

The Fortune 500 changed most in 1995. The list featured manufacturing, mining, and energy industries and service companies for the first time. This adjustment substantially affected the Fortune 500 list’s future.

There were 291 service firms among the 500 submissions that year. Three of the new service businesses cracked the Fortune 500 top 10. Walmart was fourth, AT&T fifth, and Sears Roebuck ninth. Walmart wouldn’t have been number one without this adjustment for years.

Conclusion

  • Fortune 500 annual ranking of 500 top US firms by fiscal year revenue
  • Fortune magazine publishes the list.
  • The Fortune 500 is a distinguished ranking of high-quality corporations.
  • The Fortune 500 has included leading firms since 1955.

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