Fortune500

Rank on the list is decided by revenue, which is the total money a company brings in from selling goods and services before any costs are deducted. That is why retailers, healthcare groups and energy distributors, which handle huge sales volumes on thin margins, often rank above far more profitable technology firms.

A high rank tells you a business is big, and tells you little about whether it is making money. Companies must be based in the country and must publish financial statements, so the list covers listed companies plus some private or mutual businesses that disclose their results.

Foreign-headquartered groups of the same size are outside the ranking. Anyone using the list as a shorthand for "the biggest businesses in the world" should keep that limit in mind.

In business conversations, the phrase "Fortune 500 company" is used as a signal of credibility. Sales teams use it when describing customers, recruiters use it when describing employers, and founders use it to show that their product is trusted by serious buyers.

The weakness is that the phrase is vague, since it does not say whether the relationship is a company-wide contract or a single small pilot. The membership of the list turns over steadily.

Companies fall out when their sales shrink relative to others, when they are acquired, or when they go private, and new names arrive through rapid growth or merger. Looking at who left the list ten years ago is a quick way to see how industries change.

For a finance professional, the list is a handy benchmark for comparing scale, but never a substitute for ratios. Two firms with identical revenue may have very different margins, debt levels and cash generation.

Use revenue to size the company, then use profitability and balance sheet measures to judge it.