When it comes to determining which company is the largest in the world, there are a number of factors that come into play. Some might argue that a company’s market capitalization is the most important metric, while others might insist that revenue or assets under management are more relevant. In this article, we will explore all of these factors and more, providing a comprehensive guide to help you understand which company truly is the largest in the world.
Market Capitalization: The Most Common Metric
Market capitalization (market cap) is perhaps the most commonly used metric when it comes to determining the size of a company. It is calculated by taking a company’s stock price and multiplying it by the total number of shares outstanding. For example, if a company has 10 million shares outstanding and its stock price is $100, its market cap would be $1 billion.
There are a few things to keep in mind when using market capitalization as a metric. Firstly, market cap can fluctuate wildly depending on the stock market conditions. For example, during times of economic uncertainty, a company’s stock price may fall, causing its market cap to decrease even if its underlying business remains strong. Secondly, market cap only takes into account a company’s equity, not its total assets or revenue.
According to Forbes’ Global 2000 list, as of 2021, Apple is the largest company in the world based on market capitalization, with a value of over $2 trillion. This is largely due to the fact that Apple’s stock price has been consistently high over the past several years, and the company has a large number of shares outstanding.
Revenue: Another Important Metric
While market capitalization is a useful metric for determining a company’s size, revenue can also provide valuable insight into a company’s performance. Revenue is calculated by adding up all the money a company has earned from its various activities over a given period of time, typically a year or a quarter.
One of the benefits of using revenue as a metric is that it is more stable than market capitalization. While a company’s stock price may fluctuate wildly based on market conditions, its revenue is likely to remain relatively consistent, at least in the short term. Additionally, revenue can provide a better indicator of a company’s underlying business performance, as it takes into account factors such as pricing and customer demand.
According to Forbes’ Global 2000 list, as of 2021, Walmart is the largest company in the world based on revenue, with a value of over $500 billion. This is largely due to the fact that Walmart operates one of the largest retail businesses in the world, with stores and online platforms in over 20 countries.
Assets Under Management: A Third Metric
While market capitalization and revenue are both important metrics for determining a company’s size, assets under management (AUM) is another factor that can provide valuable insight into a company’s performance. AUM refers to the total amount of money that a financial services company manages on behalf of its clients.
For companies in the financial services industry, AUM is often seen as a more reliable indicator of size than market capitalization or revenue, as it takes into account the value of the assets being managed, rather than just the equity or revenue of the company itself. Additionally, AUM can provide a better indicator of a company’s overall financial health, as it takes into account factors such as investment performance and risk management.
According to Forbes’ Global 2000 list, as of 2021, JPMorgan Chase is the largest company in the world based on assets under management, with a value of over $3 trillion.
