Apple sponsored a car in the International Motor Sports Association's… (PRN )
Apple Inc. is the world's most valuable company, potentially the best known brand on Earth, could pull in $50 billion in profit this year and has seen its stock price increase nearly 500% since 2007.
Yet when it comes to the Fortune 500 list, Apple isn't even in the top 10. Or the top 15. In fact, Apple comes in at a lowly 17th place.
That's because Fortune compiles the list in order of firms' total revenue -- the amount of money they pull in each year from sales, before they subtract the often many billions they spend to make those sales: the costs of labor, production, marketing and other necessities. For many of the largest and most established firms, those costs can be very large and can eat deeply into revenue until there's not a lot left to call profit.
But revenue can also be a useful, if rough, indicator of a company's size. Oil giant Exxon Mobil, No. 1 on Fortune's list, has more than 10,000 locations around the world, while Apple has only 363 retails stores. Wal-Mart (No. 2), has 2.2 million employees. Apple has around 60,000.
Still, ranking firms by revenue blurs the broader question of how to evaluate a company's success.
In 2011, Apple took in close to $26 billion in profit -- the third-highest of Fortune's list behind Exxon Mobil and No. 3 Chevron. Yet even though Apple's profit blows away 497 of the Fortune 500, its $108 billion in 2011 revenue puts it behind firms like Bank of America (No. 13) and healthcare technology firm McKesson (No. 14), both of which had profits of less than $2 billion -- less than a tenth of Apple's. Troubled mortgage firm Fannie Mae's $137 billion in revenue puts it nine places ahead of Apple on Fortune's list, despite its gigantic $16-billion annual lost last year.
The oft-cited Fortune 500 has been making its list the same way for nearly 60 years, so its more or less married to ranking firms by revenue -- if it didn't, it wouldn't really be the Fortune 500. And although firms like ConocoPhillips (No. 4 with $237 billion in revenue) and Valero Energy (12th, with $124 billion) don't come up in conversation very often, they play a plenty serious role in keeping the economy moving so your new iPad can get delivered on time.
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