The Fortune 500 is the most prominent indicator of successful businesses in America.
The annual Fortune 500 list produced by Fortune magazine is the most prominent and revered indicator of America's most successful corporations. Since 1955, Fortune has compiled the list of the 500 companies, both privately held and publicly traded, with the highest revenues in the preceding fiscal year. Not only an indicator of individual business success, the Fortune 500 also provides a snapshot of the American economy in general.
Inclusion in the Fortune 500
A company must meet certain requirements to be included in the Fortune 500. Any company both incorporated and operating within the United States and filing its annual financial statements with a government agency is eligible to become a Fortune 500 company. Corporations incorporated abroad or owned and controlled by another company are ineligible for inclusion on the list.
Ranking Criteria
After determining which companies are eligible for inclusion, they are ranked according to gross revenue. Other financial data and ratios are included in the list. In 1955, the list's first year, General Motors Corp. topped the charts with gross revenue of $9.8 billion. More than 50 years later, Wal-Mart Stores Inc. topped the 2010 list with an impressive $408 billion in revenue.
Insight
The Fortune 500 not only reveals the success of America's largest corporations, it also provides a worthwhile indicator of the state of the American economy. The list includes major corporations from a variety of industries, so fluctuations consistent throughout the list indicate broad changes in the economy. For instance, the economic recession of 2008 was reflected in the Fortune 500 by an unprecedented 84 percent drop in total profits from 2007 to 2008.
Trends
Much changed in the first 55 years of the Fortune 500, but some key components (and companies) remain. Originally, only industrial corporations were eligible for inclusion on the list. By the 1990s, however, service companies such as telephone service providers and financial institutions had such a significant impact on the American economy that Fortune opened up the list to companies from any sector. Despite the change in inclusion guidelines, only three corporations (General Motors, Exxon Mobil Corp. and Wal-Mart) have ever achieved the number one spot.
Expansion
While the Fortune 500 is the most noted business index produced by the magazine, a number of other rankings were created over the past decades. The Global 500 uses the same criteria as the original list but allows inclusion of internationally owned corporations; the U.S. still has a sizable lead in the number of companies on the list. Other popular Fortune lists include the Fortune 100 and Fortune's "Top 100 Employers to Work For."
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