Finding out that someone thinks you're one of the best feels good -- and that goes for companies as well as people.

Forbes magazine's Nov. 12 issue is devoted to its annual survey of the "200 Best Small Companies in America," ranked by their earnings and sales growth over a five-year period. On the list are five D.C. area firms, four of which are software-oriented. Two are new to the list, Sage Software Inc. of Rockville and American Management Systems Inc. (AMS) of Arlington. Three are returning champions: Legent Corp. of Vienna, Group 1 Software of Greenbelt and Crown Books of Landover.

While almost no company will scoff at being included in a nationally published survey, the Forbes survey, because it is based on financial soundness, engenders even greater pleasure among executives -- particularly at a time when balance sheets everywhere are beginning to reflect a slowing economy and investor fears.

"Of course we're delighted," said Charles O. Rossotti, president of AMS, a computer software firm that ranked 131 on the list.

"We've been noted in a number of things over the years," he said. "But the ones that are quality oriented ... {are} pretty satisfying."

The purpose of the survey is to identify companies whose "recent performance suggests superior management," the magazine said, and therefore appear to be strong investment candidates. But the Forbes writers are careful to say that the situation can change.

And changing they are, so as part of the evaluation process, Forbes looked at each company's earnings for the most recent quarter as well as for the last four. About 4,300 businesses nationwide fit the magazine's size requirement of annual revenue of $5 million to $350 million.

All the firms on the list are consistently fiscally conservative, which, the survey points out, tends to help when hard times hit.

Forbes's managing editor said that the writer who organized the survey assumed the issue's lead story would be about small companies "battening the hatches against the recession," but found instead that many of the chief executives of these small businesses "were looking forward to grabbing market share from their weaker competitors."

The local contenders on the list are no exception -- especially Sage Software, which is in the business of automating the development of software.

"When the economy tightens up, the demand for productivity-type products is higher," said Sage President Kevin J. Burns. "A lot of companies, rather than hiring another 10 or 15 programmers, will try to see how much more productive their existing programmers can be. Our market may be slightly counter-cyclical when the economy is down."

Sage's revenues increased 32 percent in the second quarter of 1990, Burns said.

At Legent, a conservative financial operation is the hallmark of that firm's business plan, said President Joe M. Henson.

"We have no debt, we have lots of money in the bank and we generate about $1 million a week in positive cash flow," Henson said. "It's an important factor for our customers."

Burns, however, believes that a conservative financial policy is nothing short of necessary in the software industry.

"We've never used debt as part of our capital structure," he said. "In the software business, where you don't have tangible assets -- it's really more based on intellectual property, we feel it's important to finance the company" without debt.

The true impact of surveys such as Forbes's is hard to quantify -- except that they are universally regarded as morale boosters for company employees, and also may help attract skittish prospective clients when times are tough.

"People like to do business with somebody that other people also think is a good company," AMS's Rossotti said.

"To have someone else say the same thing is comforting."