Hi-Fella Insights

Fortune 500 Companies: What are Those?

The Fortune 500—a coveted list that resonates with prestige and influence in the world of business. But what exactly are these Fortune 500 companies, and why do they hold such a prominent position on the global stage? The Fortune 500 is an annual ranking of the largest and most powerful corporations in the United States, serving as a barometer of economic might and corporate success. These companies transcend industries, shape economies, and set the standard for excellence in their respective fields. Explore the world of Fortune 500 companies. Learn about the biggest players in global business and their impact on the economy.

What is Fortune 500?

What is Fortune 500? The term Fortune 500 refers to a list made by Fortune magazine every year about 500 largest companies in the USA. The Fortune 500 companies in the US earn their spots on this exclusive list based on how much money they make each year. It’s important to note that this list includes both publicly traded companies, whose financial information is public, and private ones, whose revenue data is publicly available. To be part of the Fortune 500 is a significant achievement and a mark of distinction for any company. It’s a bit like earning a gold medal in the corporate world, showing that you’re among the very best at what you do. So, being on the Fortune 500 list isn’t just about size; it’s about being recognized as a leader in American business.

Who are They?

What are the Fortune 500 companies? In the 2023 list that Fortune magazine has released, there are top 10 companies. The first one is Walmart. The list is then followed by Amazon, Exxon Mobil, and Apple. UnitedHealth Group then came in 5th place. CVS Health is in 6th place, followed by Berkshire Hathaway, Alphabet, McKesson, and Chevron.

The companies certainly come from different cities. There are ten big cities with the most Fortune 500 companies. For the 2023 list, New York is in first place with 47 companies. The list quickly followed by Chicago with 31 companies, Houston with 25 companies, Dallas with 22 companies, San Jose with 20 companies, Washington DC with 18 companies, Atlanta with 16 companies, Boston, Minneapolis, and San Francisco with 14 companies respectively. 

Of course when a company wants to be listed on Fortune 500, there are some criteria and methodology used for ranking companies. To make it onto the Fortune 500 list, a company needs to meet some basic requirements. It can be a for-profit business, either publicly traded (where anyone can buy its stock) or privately held. Importantly, it has to be based in the United States and have its financial information reported to a U.S. government agency. But the most important thing is money. To be in the Fortune 500, a company has to make a lot of it. It needs to have one of the 500 highest revenues among all U.S. companies. So, being on this list means you’re one of the biggest and most successful companies in the country.

The Criteria and Methodology Used for Ranking Companies.

Fortune has their own methodology to rank companies in the Fortune 500 list. Here is the methodology they used. 

  1. Ranking Criteria
    Companies on the Fortune 500 list are ranked based on their total revenues for their respective fiscal years.
  1. Inclusion Criteria
  • The survey includes companies that are incorporated in the U.S., operate in the U.S., and file financial statements with a government agency.
  • This encompasses both public companies and private companies, including cooperatives and mutual insurance companies that file financial statements with state regulators.
  • It also includes companies owned by private entities, domestic or foreign, that file financial statements with a government agency.
  1. Exclusion Criteria
  • Private companies not filing financial statements with a government agency are excluded.
  • Companies incorporated outside the U.S. are not considered.
  • U.S. companies consolidated by other companies, whether domestic or foreign, that file with a government agency are excluded.
  • Companies failing to report full financial statements for at least three-quarters of the current fiscal year are also excluded.
  1. Calculation of Percent Change.
    Percent changes in revenue, net income, and earnings per share are calculated based on the original data reported by the companies. These figures are not adjusted for mergers, acquisitions, or accounting changes. The only adjustments made to prior years’ data are for significant restatements due to reporting errors that require the filing of an amended 10-K form.

Cities with the most fortune 500 companies: USA.

As the biggest 500 companies in the US, Fortune 500 companies indeed have some impact on the economy. Here is the impact they made on the economy.

  1. Impressive revenue
    The 224 New American companies on the 2023 Fortune 500 list generated a remarkable $8.1 trillion in revenue during fiscal year 2022. To put this into perspective, this revenue figure surpasses the Gross Domestic Product (GDP) of several developed countries, including Japan, Germany, and the United Kingdom. If these companies were a country, they would have the world’s third-largest economy, trailing only the United States and China.
  1. Significant employment
    The New American Fortune 500 companies play a vital role in job creation. On average, each of these companies employs approximately 66,192 workers. Collectively, these firms provide jobs for over 14.8 million people globally. This employee population would rank as the fifth-largest state in the U.S., surpassing Pennsylvania and coming after New York in terms of size.
  1. Contributions to the US economy 
    Fortune 500 companies, both new and established, make substantial contributions to the U.S. economy, accounting for over 65% of the nation’s Gross Domestic Product (GDP). They not only impact the national economy but also have observable effects at the local and state levels. States with a higher concentration of Fortune 500 headquarters, such as New York, Texas, and California, tend to serve as central “business hubs.” The presence of these corporations correlates with increased business investment, development, and the creation of professional networks that promote economic activity and innovation.

Fortune 500 companies are the leading players in the American corporate landscape, representing the largest and most influential publicly traded firms in the United States. These companies span diverse industries, generate substantial revenue, and have a significant impact on the national and global economies. The Fortune 500 list serves as a barometer of economic health, reflecting the dynamic nature of business in the modern world. It underscores the importance of innovation, financial stability, and market leadership as key drivers of success in today’s competitive business environment. Moreover, the cities that host these companies become economic powerhouses in their own right, highlighting the interconnectedness of business and urban development. As we continue to witness shifts in industry trends and the global economic landscape, Fortune 500 companies will remain central to discussions about economic growth, job creation, and the future of business in the United States.