By contrast, Forbes takes an approach that is harder to explain andimplement, but produces a better quality of rankings. The companylists in Forbes and Forbes Asia are typically based on compositescores using multiple metrics. For example, the Global 2000 list’smethodology looks at a company’s revenues, profits, assets and marketvalue. These four metrics are all taken into account to derive the finalscoring of the 2,000 companies. It is much harder for companies togame this approach, as artificially increasing sales by lowering priceswould normally result in reduced profits. When added together, thehigher score in one area will be offset by a poorer score in another.
Taking these four metrics together leads to a powerful filtering ofcompanies, with only the highest quality ones making the final cut.Only those managing well across all the metrics—sales, margins,assets and market value—will rise to the top of our Global 2000 list.These companies are doing well across a range of metrics, implyingthey have a more robust and sustainable business model than thoseexcelling in only one metric.
To top it off, these lists get both digital and human screenings.Once the computer has sorted the results by raw numbers on aquantitative basis, human editors provide the final quality controlon a qualitative basis. They check for issues such as firms with goodresults but lackluster reputations, and other issues that don’t show upin figures on a spreadsheet. When the final tally is made, the distilledproduct is not just a tally of one-dimensional wonders, but also amore accurate representation of real-world champions.