Tuesday, August 20, 2013

World’s Largest Companies

World’s Largest Companies
There are many different ways to measure the size of a company, each of which creates a different ranking of the world's largest companies. Global Finance presents three of the most renown, the Fortune Global 500, the FT Global 500 and the Forbes Global 2000.

By Valentina Pasquali and Denise Bedell – Project Coordinator: Alessandro Magno

Data is from the Financial Times Global 500, 2012; Fortune Global 500, 2011; and Forbes Global 2000, April 2012.

Fortune Global 500 – Top 10
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Financial Times Global 500 – Top 10 k07

Forbes Global 2000 – Top 10
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The Fortune Global 500 list is based on revenues. Companies are ranked by total revenues for their respective fiscal years ended on or before March 31, 2011. It is not required that they be public companies, but they must publish financial data and report part or all of their figures to a government agency in order to be considered. Revenue figures for corporations include consolidated subsidiaries and reported revenues from discontinued operations but exclude excise taxes. For banks, revenue is the sum of gross interest income and gross noninterest income. For insurance companies, revenue includes premium and annuity income, investment income, realized capital gains or losses, and other income, but excludes deposits.

The FT Global 500 ranking is based on market value. Market value, or market capitalization takes a snapshot of the share price multiplied by the number of shares outstanding.

Finally, the Forbes Global 2000 uses four metrics—sales, profit, assets and market value—each of which is equally weighted, in order to determine the top companies. In this survey, only public companies are considered.

Each of the rankings has its strengths and weaknesses in terms of determining the world’s largest corporations. For example, using solely revenue as a measure—as in the Fortune list—does not take into account differences in expenditures for the same amount of incoming revenue, and thus gives a bias towards revenue-heavy retailers.

Using market value—as the FT list does—involves a single snapshot of the relative value that investors put on the company—without accounting for variations due to seasonality, the impact of positive or negative news headlines about the company, M&A rumors, executive changes, and the many other factors that affect share price on a daily basis. Finally, listing only public companies—as with the Forbes ranking—excludes privately owned and wholly state-owned corporations.

In the 2011 Fortune ranking, the latest available, US-based retailer Wal-Mart comes in at the top, with almost $422 billion in revenues. In second spot is oil & gas company Royal Dutch Shell of The Netherlands—with revenues of $378 billion. American Exxon Mobil follows closely with nearly $355 billion in revenues.

US computer giant Apple tops the FT 2012 ranking, with a market value of almost $560 billion. Second is Exxon Mobil at $408,8 billion and third is Petrochina with $279 billion of market value.

Exxon Mobil leads the 2012 Forbes list, followed by JPMorgan Chase and General Electric, a trio of American companies. Exxon Mobil is, on average, the highest ranking company across the three lists.

Data is from the Financial Times Global 500, 2012; Fortune Global 500, 2011; and Forbes Global 2000, April 2012.  

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