What is Fortune 500?

Published by Thomas Herold in Economics, Investments

'Fortune 500' is explained in detail and with examples in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Fortune Magazine publishes a famous annual list of the biggest 500 companies throughout the United States. This list has become known as the Fortune 500. The positions in the list are based upon total revenues earned for the given year. The magazine’s editors compile this list from the most current revenue figures. They consider both private and public companies. For a private company to be included, it must have revenue information that is available as part of the public domain.

Being listed as one of the Fortune 500 companies has always been deemed to be a prestigious position. Over recent years, the leaders in this important list have competed with each other for the top spots. Among the contenders for these important top rankings have been Walmart, Exxon Mobile, Apple, General Motors, Chevron, and General Electric. Energy producing companies nearly always figure prominently in the list.

The Fortune 500 list has evolved quite considerably since Fortune Editor Edgar P. Smith first conceived of it. The first year the magazine published it was 1955. At the time, only companies whose revenues came from certain sectors were considered to be included. This comprised companies in energy exploration and production, mining, and manufacturing.

Other sectors of the economy were not completely left out by Fortune Magazine. These were included in separate special lists of Fortune 50 companies. In these lists, there were companies which were ranked by assets. This included the 50 biggest commercial banks by assets, 50 largest life insurance companies, and 50 largest utilities in the United States. Other Fortune 50 companies were ranked by revenues. Among these lists were the 50 biggest transportation companies and the 50 largest retailers in America.

Fortune magazine finally expanded the definitions of what companies could be included in the benchmark Fortune 500 list in 1994. They broadened their methodology to factor in companies who were members of the services industry. This change made an enormous difference in the subsequent results immediately. The Fortune 500 list gained 291 new companies because of it. Three of the members of the coveted Top 10 spots became service companies for the first time in that ground breaking year.

Besides the Fortune 500, Fortune Magazine also publishes several other related rankings. These include such lists as the broader Fortune 1000 and the more selective Fortune 100. These lists are much less widely cited than is the gold standard Fortune 500 list. Fortune has also expanded their lists internationally in recent years. This list is known as the Global 500. Its members generally employ more people, have higher revenues, and boast higher profits than the 500 companies on the solely American based Fortune 500 list.

The all around health and performance of the U.S. economy can be measured by the results of the Fortune 500 companies. During the middle of the Great Recession back in 2008, these companies’ results gave hope that there might be improvement in the overall economic picture.

In 2009 the Top 500 American corporations as a whole saw earnings increase by 335%. These more encouraging results indicated that possible economic recovery lay ahead. The subtraction from or addition to this list also speaks volumes about different sectors in the American economy. Following the collapse of the housing market in the Great Recession, home builders fell off of the list in significant numbers.

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The term 'Fortune 500' is included in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.