Online Extra: Description Of BW 50 Methodology
Evolution has been a hallmark of the BusinessWeek 50 ever since we created the ranking back in 1997. One of our goals was to capture the dynamic nature of strong growth. It's reflected in how we identify the best of the S&P 500. We use 10 performance metrics, starting with sales and earnings growth. We tally both for the most recent 12-month and three-year periods, to reward companies that can prosper over time. As a gauge of how well management deploys its resources, we factor in net profit margins and return on equity. And finally we account for the market's view, by measuring total shareholder returns for one- and three-year periods.
We weight the results for sales volume, because it's harder for large companies to post impressive revenue- and profit-growth figures. And we factor in the debt-to-capital ratio, to recognize clean balance sheets. That also makes it harder for corporations to qualify with growth that's primarily the result of debt-laden acquisitions.