Companies don't have to be huge to land a spot on our Investor 500 ranking, but they do need to be among the biggest. The list contains the 500 largest businesses on the TSX and TSX Venture Exchange (by market capitalization) as of our April 4, 2008 cut-off date. If you are viewing a subsequent quarterly update to the i500, the cut-off dates are: June 30, September 30 and December 31. Qualifying companies also have a head office in Canada and at least a year of trading history.

For fairer comparisons, we again slotted the biggest 50 into the large-cap group, the next 150 in size into the mid-cap group and the remaining 300 into the small-cap group. We then ranked businesses in each group by 1-year total return, a measure that takes into account share price change and dividends or cash distributions. Five-year returns are also total.

If you're a numbers person, you'll find plenty in our large-, mid- and small-cap tables. If you're a details person, the price-to-earnings and price-to-sales ratios are trailing 12-month measures. The P/E ratio uses trailing 12-month diluted earnings-per-share from continuing operations. Operating margin, profit margin, return-on-common-equity and return-on-asset figures are based on the most recent fiscal year. All dollar amounts are in Canadian currency, and we used net revenue for banks and other financial institutions when possible to enable better comparisons with industrial companies.

Our annual Investor 500 is more than just a ranking of which stocks soared or tanked over the past year; it's a source of investing ideas. As in years past, we screened our 500 companies for stocks that matched sets of potentially profitable characteristics. You'll find groups of businesses that passed over various financial benchmarks, along with the criteria we used to flag them. When our screens found heaps of stocks, we turned to other sources, such as analyst recommendations, to trim the number on our list.

Our screens follow popular investing styles from growth and value to defensive and turnaround, but we also included some less conventional stock-picking approaches under themes such as Best Managed Companies and Dogs of the TSX. In the spirit of the old adage, A penny saved is a penny earned, we put together Analysts' Pans, a list of companies that equity research firms generally give the thumbs down. That's new to the Investor 500. So too is The 100 Most Bullish Stocks, bite-size yet meaty write-ups of the 100 companies on our list that rate the highest among analysts. (Note that this additional material is applicable only to the Summer 2008 issue referencing Q1.)

Some words of caution. The Investor 500 relies on financial data supplied by Bloomberg, the information choice of many investment professionals. The company's crack data team strives for accuracy, but errors can occasionally occur. For example, after compiling this year's ranking, we learned late in the process the head office of a handful of firms wasn't in Canada, as Bloomberg indicated. To avoid disappointment, verify numbers before investing.

Lastly, the stock picks are meant to be the start, rather than the end, of your investment decision. As always, do your own homework before buying.

The rankings were compiled by staff writer Calvin Leung and data manager Phil Froats using Bloomberg.