There are several specific factors that are taken into consideration when a company is reviewed and then ranked as a Fortune 500 Company in the US. According to Fortune.com, they have a methodology for how companies are ranked. The method is discussed below as well as an overview of how to get your company ranked in the Fortune 500 companies rank in the US.
Methodology for Ranking
The listing below details several factors that a company needs to comply with or qualify for in order to be ranked as a Fortune 500 company. All data reviewed for the fiscal year basically ends on January 31, 2014, for example. The figures shown in the ranking would then be for the year ending on December 31, 2013. There is a data verification process that has been implemented to assist with the ranking methodology. The majority of data is received from S&P Capital IQ as well as Hoover’s, and Morningstar Document Research.
In order to be ranked, the company needs to be incorporated in the US and also have a corporate office that is located in the United States. Additionally, these companies need to be in current standing with regard to having submitted all pertinent financial statements and tax forms with the appropriate government agency. This includes private companies as well as cooperatives and mutual insurance companies.
The total amount of revenue for a company from the previous fiscal year is taken into account during the review process. Any calculations regarding percentage change for revenue, net income and earnings per share are based upon the data that had originally been reported. Any profits that are shown after amounts after taxes, credits, charges and other dividends issued. Balance sheets regarding the company’s assets are reviewed.
The number of employees as published in the company’s year-end report is also taken into consideration for ranking purposes. Part-time employees are counted as ½ of a full-time employee.
The Earnings Per Share figures are reviewed as they are listed on the income statement. The ranking methodology also takes into account the Return to Investors Total which includes both the price appreciation as well as the dividend yield to the company investor.
5. Market Value
Data is received by S&P Capital IQ and Thomson Reuters in order to calculate the total returns as well as the company’s market capitalization.
Getting Your Company Ranked
The current Fortune 500 companies rank for 2014 lists Walmart as number one and it edged out Exxon Mobil for the second year in a row. Basically, each ranking lists a short blurb about the company’s sales—Walmart’s was $473.1 billion—for 2014. The key financials are discussed such as revenues, profits, total assets, total shareholder equity, and market value. The profit percentage for sales, assets and stockholder’s equity is also listed. The ranking lists the earnings per share, the total returns to the investors as well as the Company Profile.
As discussed previously, there are five basic factors involved in ranking the companies on the Fortune 500 Listing.
- Market Value
In order to get listed in the ranking, your company needs to meet the specific criteria pertaining to each of the five factors. Your company needs to comply with government regulations, have revenue that competes with the largest 500 companies in the US, have an excellent return for your investors, and be a company with high market value. In recent years, the following four companies have been vying for that number one spot, with Walmart and Exxon Mobil grabbing the 1st and 2nd ranks for 2014.
- Exxon Mobil
- General Electric
The ranking for the top 5 companies for 2014 are: Walmart ($473.1 billion), Exxon Mobil ($438.26 billion), Chevron ($228.9 billion), Berkshire Hathaway, and Apple.
If your company continues to produce quality products that cater to the consumers’ needs and your sales continue to increase each year, you greatly improve your chances of competing with the top 500 companies in the US. These companies have CEOs and Executives who are constantly seeking ways to be more innovative in their production methods and in applying technological advances to their products. Implementing a creative marketing strategy will also make your company more viable and achieve market value. Hiring management with visionary and leadership ability will create a workplace environment that motivates employees to succeed and that increases your company’s chances of success.