As the 17th edition of The Seattle Times' Northwest 100 demonstrates, small and midsize companies are just as capable of superior performance as the corporate giants.

As the 17th edition of The Seattle Times’ Northwest 100 demonstrates, small and midsize companies are just as capable of superior performance as the corporate giants; indeed, they may have something of an edge.

To compile this year’s ranking, we first eliminated companies that weren’t traded on a major exchange — the New York and American exchanges or the Nasdaq Stock Market — for all of 2006 and 2007.

We also dropped from consideration companies whose stock had fallen below $2 a share any time in that two-year period. In the end, just 120 out of 153 Northwest-based companies made the cut.

Then we pored over each company’s financial results for its two most recent fiscal years. (Why two years? To reduce the chances a one-hit wonder will come out on top.) We focused on four separate performance measures: sales per employee, operating income, return on equity and stock price.

We gave the most weight to return on equity, on the presumption that it’s the single best measure of how well a company is doing for its shareholders. But no one measure dominates the rankings: To come out on top, a company has to do well on all four factors.

Business reporter Drew DeSilver and lead news assistant Gary Dougherty compiled the data from Bloomberg News, supplemented by company reports filed with the Securities and Exchange Commission.