What is the Fortune 500? Ranking, Criteria, and Impact on US Business

The Fortune 500 is an annual list compiled by Fortune magazine, ranking the 500 largest U.S. companies by total revenue. First published in 1955, it has become a benchmark for corporate success and economic health in the United States. This list is more than just a ranking; it’s a snapshot of the American economy’s health and a guide to understanding the trends and giants of various industries.

What is the Fortune 500?

The Fortune 500 is a prestigious list that includes a diverse array of companies from various industries such as technology, healthcare, finance, and retail. Both publicly traded and privately held companies are eligible for inclusion, making it a comprehensive representation of the U.S. corporate landscape. These companies are not just limited to traditional sectors; they also include service-oriented businesses that have become integral to the modern economy.

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Criteria for Inclusion

To be included in the Fortune 500, companies must meet several specific criteria:

• They must be incorporated in the U.S. and file financial reports with the Securities and Exchange Commission (SEC).

• They must generate significant annual revenue, ranking among the top 500 U.S. companies.

• They must have publicly available financial information.

• Revenue figures include consolidated subsidiaries and reported revenues from discontinued operations.

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These criteria ensure that only the largest and most financially robust companies make it onto the list.

Ranking Methodology

Companies are ranked solely by their total revenue for their respective fiscal years. The revenue figures are derived from company filings and include gross income before deductions for expenses, taxes, interest, and depreciation. This straightforward approach ensures that the ranking is based on a clear and consistent metric.

Impact on US Business

Being a Fortune 500 company has significant implications:

• It enhances the company’s reputation, credibility, and visibility in the market.

• It increases opportunities for partnerships, investments, and talent acquisition.

• It serves as a benchmark for measuring performance and competitiveness relative to peers.

Economic Indicator

The Fortune 500 also serves as an indicator of the U.S. economic landscape. The list reflects the health and trends of the American economy, providing insights into which sectors are thriving and which are facing challenges.

Industry Representation

The list includes top companies from various sectors such as technology (Apple, Amazon), healthcare (UnitedHealth Group), and retail (Walmart). This diversity highlights the broad economic base of the United States.

Comparison with S&P 500

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While both lists are influential, they differ in their criteria:

• The Fortune 500 ranks companies by total revenue.

• The S&P 500 ranks companies by market capitalization.

• The Fortune 500 includes both public and private companies, whereas the S&P 500 only includes publicly traded companies.

Historical Context

First published in 1955 by Edgar P. Smith, the initial focus of the Fortune 500 was on manufacturing and industrial companies. However, in 1995, the list expanded to include service companies, reflecting the evolving nature of the U.S. economy.

Current Trends and Statistics

In recent years, the Fortune 500 has seen several trends:

• The lowest total revenue required to make the list has continued to rise; for example, it was over $7.2 billion in 2023.

• There has been a notable rise in tech and healthcare companies dominating the list, reflecting their growing importance in the economy.

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