What Does TTM Mean? 3 Reasons to Review TTM Financials

In the worlds of business and finance, the meaning of TTM is “trailing twelve months,” an acronym for financial reporting trailing back for the last twelve months of a company’s operations. Some people refer to the same concept as LTM, meaning “last twelve months.”

Rather than using the financial data of the previous fiscal year or relying only on the financial reporting you have for the most recent quarter of the current calendar year, TTM data pulls from the last twelve consecutive months from the date of the request. You can use TTM figures to provide you with more up-to-date financials like a balance sheet, net income statements, cash flow statements, and other performance data relevant to an annual report of the previous 365 days.

Using the TTM methodology to stay abreast of a business’s success can be very helpful in determining operational trends or forecasting company expenses or earnings. Here are three reasons business owners and execs look at TTM data when assessing a company’s performance:

1. 1. To stay current and accurate: TTM can help business owners grasp their organization’s financial health in the most up-to-date way possible. Seeing how the last full year of financial performance bled over into this year’s could be more helpful than just studying the previous year of financial statements alone. Combining what you have of the last year with what you have currently might depict a far more realistic overview.
2. 2. To understand what’s normal: The smaller or less current your financial data set, the more likely it is you will be unable to see what is or isn’t normal for your business. Some businesses fluctuate in terms of their price-to-earnings ratio, general revenue growth, or working capital over the course of a year. It’s possible to misinterpret such data if you’re only looking at outdated information or just a couple quarters’ worth of current data. By analyzing your TTM revenue and other metrics, you can look at key performance indicators that will denote whether you’re in a predictable cycle of seasonality or trending toward an abnormality or a downturn.
3. 3. To understand the big picture: Looking over the TTM of your financials can help you plan for a long-term future, whereas only focusing on what’s happened in the past (whether that be the last fiscal year or the current quarter) might keep you from planning as efficiently and holistically as you could. By using accounting principles like TTM, you can better understand what this broader yet more precise scope of data is revealing about the potential future of your business.
   

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