What it is:
The Fortune 500 is an annual list, published by Fortune magazine, of the 500 largest companies by revenue in the United States.
How it works (Example):
Any company that reports financial data to a United States government agency is eligible for consideration in the Fortune 500. Private companies and subsidiaries of foreign companies operating in the U.S are exclude.
The Fortune 500 ranks companies by revenue, but also discloses the after-tax profits, assets, stockholders' equity, market value, and earnings per share of each company. Additionally, each company's total return to investors, which considers the price appreciation and reinvested dividends of the most widely held or actively traded class of each company's common stock, is included on the list.
Why it Matters:
The Fortune 500 is a definitive list of the country's largest and often most influential companies. A company's fall in rank on the list could indicate or reflect trouble for the company or its industry as a whole, and a move up the list generally signals good news.