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TTM Meaning – Trailing Twelve Months

TTM Meaning in Finance – Trailing Twelve Months

TTM MeaningTTM Meaning:  In finance, TTM refers to the trailing twelve months of financial data starting with the current period and going back twelve consecutive months.  Using trailing twelve-month (TTM) financial numbers is an efficient method of evaluating the most current financial data in an annualized format. Annualized data is effective because it helps to mitigate the impacts of seasonality.  Also, it lessens the impact of non-recurring anomalies in financial performance.  For example, transient fluctuations in demand, spending, or cash flow. TTM allows analysts to assess the most current monthly or quarterly data rather than older data that comprises entire fiscal or calendar year information. TTM charts tend to be more effective for forecasting rather than trying to spot short-term changes.

A TTM period is often defined as the 12 months before the current month.  Or, the 12-month period ending with the firm’s most recent earnings report or other financial disclosure. Consider TTM data to be a 12-month yardstick used by firms and financial analysts to gauge recent performance.  This is as opposed to a company’s fiscal year, current calendar year, or year-to-date (YTD) measure. TTM is a versatile tool.  It may be used to analyze balance sheet numbers, profit and loss accounts, revenue, and cash flow charts. Just keep in mind that the 12-month period referred to by any particular TTM data varies from financial statement to financial statement.

TTM Meaning for Financial Reporting

Assessing various financial components of a company’s operation is an important part of investment research. Analysts like to compare current data to the same period over the previous 12 months.  This is generally referred to as the trailing 12 months or TTM.  It provides a direct comparison when assessing a company’s sales, profit, costs, and other indicators. However, the financial data that analysts examine is derived from quarterly reports that publicly listed corporations are required to produce.

To comply with Securities and Exchange Commission (SEC) standards, this data is released on a quarterly basis (Form 10-Q) or at fiscal year-end (Form 10-K). For example, important financial statistics can be contained in a balance sheet or an income statement.  But, this data may change seasonally or exhibit transient volatility. Using TTM allows a company’s management and stakeholders to assess how the company is performing at any given period.  More importantly, it allows for an apples-to-apples comparison. In other words, by continually looking back a year, issues like seasonality or one-time costs may be smoothed out. Revenue (sales) and profitability measures illustrate how much money the firm made and earned over the previous year, regardless of which quarter’s financial statements are presented.

TTM Financial Data – Why it Matters

TTM data are especially important when yearly or quarterly numbers are out of date.  Also, when a company’s growth or profitability has changed significantly in a short period of time. TTM data also helps to offset the impact of seasonal shifts.  This provides a clearer view of the company’s overall performance. Using TTM data can be especially valuable for communicating with stakeholders and investors.  This is because it provides a clear picture of the company’s present status in an easily comparable format. Internally, this data can be quite useful, especially when setting long- and short-term strategies and goals. Having TTM data ensures that choices are made based on the company’s current reality,  This is as opposed to using obsolete information that may have originated from a totally different context.

TTM meaning for Individual Investors

There are several methods for picking particular firms in which to invest. Many investors want to observe that a company’s income and earnings have been increasing over the last year.  Similarly, they want to see that costs and debt have been dropping. TTM data with various focuses enables investors to compare current performance to that of the prior year. This, among other things, guarantees that seasonal effects are taken into account.  This is regardless of the 12-month period under consideration.

TTM Meaning: Financial ratios

TTM data may be used in a variety of settings and reports.  What you measure will be primarily determined by your objectives. Key performance indicators are one apparent point of reference (KPIs). Using TTM statistics can assist you to measure how effectively you’re meeting goals without any lag.  Outdated, prior figures or the possible influence of changing seasons and events within that time period can negatively impact results.

For example, financial ratios can be calculated using TTM numbers. The price/earnings ratio, also known as P/E (TTM), is computed by dividing a company’s current stock price by its trailing 12-month earnings per share (EPS). TTM may be used on a variety of financial data including sales, yield, and P/E ratios.

  • Sales (TTM) – TTM data presents the entire revenue of a corporation during the previous 12 months. This might be interest income and other fees for a bank.  Conversely, it would represent net sales for a manufacturing or retail business. TTM revenue offers a more accurate view of current performance than the company’s most recent annual or quarterly revenue report, which might be months old.
  • Yield (TTM) – TTM yield is a measure of the proportion of income delivered to investors by a mutual fund or an exchange-traded fund (ETF) over the preceding 12 months. TTM yield for a fund is computed by calculating the weighted average of the yields in its portfolio of assets.
  • Price/earnings ratio (TTM) = This ratio is also known as trailing P/E.  It calculates a company’s P/E ratio for the past 12 months. It is determined by dividing the current stock price by the past four quarters’ earnings per share (EPS). Investors may get a sense of how pricey or inexpensive a company is in relation to its earnings potential by looking at the trailing P/E ratio.

TTM Meaning & Example

If a public firm does not reveal its performance history in TTM format, investors and analysts must do the calculation manually. In many circumstances, quarterly filings with the SEC, as well as year-to-date (YTD) statistics and annual reports, can offer the essential data. One method for calculating a company’s TTM is to add the data from the end of the previous quarter to the end of the current quarter (assuming that that data is available). Then you deduct the data that was released more than a year ago. It is optimal to use year-to-date data rather than simply the most recent quarter.

For example. assume it is Q2 and you are analyzing CompUCorp.  The company just reported revenues of $20 billion YTD. Their revenues for the previous year were $66 bn and last year’s YTD figure was $12 bn.  To calculate, you add $20 and $66 and subtract $12.  This reveals that $74 bn is the current TTM revenue figure.

Up Next: What Is a Unilateral Contract?

Unilateral ContractA unilateral contract is a one-sided offer where the offer creates an obligation only if it is fulfilled by the performance of a specified act. The offeror commits to remit payment only following the occurrence of that certain act. In general, unilateral contracts are most commonly utilized when an offeror has an open request for payment for specific conduct. An insurance policy contract, which is frequently partially unilateral, is an example of a unilateral contract. The offeror is the sole party having a contractual responsibility in a unilateral contract. One-sided contracts are the most common type of unilateral contract.

A unilateral contract is just as legally binding as a bilateral contract, except that only one person is making a commitment. The only way to accept a unilateral contract is to perform and finish the specified work. The offeree is under no obligation to do the act specified in the unilateral agreement.

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