Forbes 500

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The Forbes 500 was an annual listing of the top 500 American companies produced by Forbes magazine. [1] [2] The list was calculated by combining five factors: sales, profits, assets, market value, and employees. [3] The list was last issued in March 2003 (based on 2002 data for the companies); it is no longer calculated each year and has been replaced by the Forbes Global 2000, which includes non-U.S. companies but is calculated on a similar basis as the old Forbes 500 (although it does not include employees).

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Quantifying the largest companies

Various methods exist in determining the largest corporations. Forbes Magazine, for example, takes into consideration profit, revenue, market capitalization, and value of assets when ranking companies by size; the magnitude of any one of these factors alone may not necessarily be indicative of a firm's overall ranking.

The value of a firm's assets is typically derived from a company's ability to generate cash via its ownership and control of inputs and/or distribution of the final product. Banks and financial institutions, for example, tend to have a large number of assets due to loans and investments, however, a large portion of these do not actually belong to the firm since these assets are customers' deposits.

Fortune 500 ranks companies by revenue. This method is heavily biased towards distributors such as Walmart, which may have a high volume of sales but may be operating on very thin profit margins.

Another method might be to look at the market capitalization of the company. However, this price is dictated by the perceived value of the company and its prospects. At one point in the late nineties, Cisco Systems would have been the biggest company by this measure, however the dot-com bubble crash reduced its perceived value dramatically. Another example would be Amazon.com, which despite being barely profitable, has a very large market cap rivaling or exceeded established American companies due to the general market sentiment about its innovations.

See also

Related Research Articles

The Forbes Global 2000 is an annual ranking of the top 2000 public companies in the world, published by: sales, profit, assets and market value. The list has been published annually since 2003.

The FT Global 500 is an annual snapshot of the world's largest companies to show how corporate fortunes have changed in the past year, highlighting relative performance of countries and sectors. The companies are ranked by market capitalization. The greater the stock market value of a company, the higher its ranking. Market cap is the share price multiplied by the number of shares issued.

References

  1. ↑ "Forbes 500". Investopedia. Retrieved August 25, 2018.
  2. ↑ "Forbes 500". TheFreeDictionary.com. Retrieved August 25, 2018.
  3. ↑ "The Forbes 500s". Forbes. March 28, 2003. Archived from the original on June 18, 2013. Retrieved August 26, 2018.
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