Company Rankings Key Terms

Learn company rankings key terms for business promotion and analysis

By Christine Pollock

Learn company rankings key terms to establish different methods of valuation and communications. Determine where your own company stands and what areas you might want to work on.

Since investors look at company rankings to determine strategic partnerships, knowing company rankings key terms gives you an edge over competitors. It helps you participate in the business playing field with ease as you negotiate business deals with others interested in your company rankings.

Share price

To make a list like Forbes, company share prices must hold at a five-dollar minimum with a 10,000 average volume for at least three months. Share prices are the prices at which shareholders purchase stock. This price comes from a formula that divides market capitalization by the number of outstanding shares.
Try: Forbes.com explains criteria set for small companies who make its top rankings list. It highlights winners, along with their statistics and summarizes the removal of companies from the list as share prices fell.

Profit margins

To stand out in company rankings, a company must show strong enough profit margins to survive market volatility. Businesses determine their profit margin, also called a net margin, net profit ratio or net profit margin, by figuring their net profit as a percentage of revenue.
Try: The American Chemical Society offers an article detailing companies in the top rankings. It discusses the impact of profit margins on the rankings.

Market volatility

When determining company rankings, professionals look for a company's ability to survive market volatility. This means the business needs to have enough under it to ride unexpected highs and lows of the market without going under.
Try: Cable News Network (CNN), a Time Warner Company, offers a detailed look at what market volatility means in general and what it means for businesses.

Methodology

Some company rankings use subjective criteria and others use methodology, which includes concepts, comparative studies and individual method critiques, to place businesses in the ranking list.
Try: CRO Corp discusses its own use of methodology. It covers areas of methodology it uses to create its best-of lists for rankings.

Return on capital employed

Return on capital employed (ROCE) in companies that achieve high rankings are higher than the company borrowing rate. If it weren't, shareholder's earnings would go down.
Try: Investopedia ULC defines the term ROCE and offers links for those interested in delving deeper into the topic.

Sector

This term refers to subdivisions in the economy. Evaluators often sort company rankings according to sector.
Try: The McGraw-Hill Companies discusses how it determines company rankings. It covers the way it measures companies using sectors as a factor.