Trailing Twelve Months (TTM)

Definition

Trailing Twelve Months (TTM) refers to the past 12 consecutive months of a company’s performance data used for reporting financial figures. This metric provides a more current picture of a business’s financial performance than relying on annual filings, which can include information that is nearly out-of-date. The “trailing” aspect means this data is continuously updated as each day passes through the fiscal year.

TTM vs Fiscal Year Comparison

Examples

1. TTM Net Income: If a company reports a net income of $4 million over the past 12 months, it gives investors an idea of its profitability based on recent trends.
2. TTM Earnings Per Share (EPS): A TTM EPS of $3 may indicate to investors how much value a shareholder might expect based on the most recent performance.
3. TTM Price to Earnings Ratio (P/E): A TTM P/E ratio might provide insight into how much investors are willing to pay for every dollar of earnings based on the last year’s performance.

Related Terms

• Earnings Per Share (EPS): The portion of a company’s profit allocated to each outstanding share of common stock, indicating the company’s profitability.
• Price to Earnings Ratio (P/E): A valuation ratio calculated by dividing the current share price by earnings per share (EPS).
• Net Income: The total earnings of a company after all expenses and taxes have been deducted from revenue.

Visualization

    graph LR
	    A[TTM Financial Data] --> B[Earnings]
	    A --> C[EPS]
	    A --> D[P/E]
	    A --> E[Yield]
	    F[Fiscal Year Data] --> B
	    F --> C
	    F --> D
	    F --> E
	    title Financial Performance Metrics Comparison

Fun Facts & Insights

• Historical Tidbit: Did you know that most investors use TTM data because, unlike a skincare routine, it actually smooths out the ups and downs that financial reports can face throughout the year?
• Humorous Quote: “The stock market is filled with individuals who know the price of everything, but the value of nothing.” – Philip Fisher
• Amusing Insight: TTM is like the car’s rearview mirror; it tells you how the past went, while the windshield shows you where you need to steer. Just watch for those bumps on the road ahead!

Frequently Asked Questions

1. Why is TTM preferred over annual reports? TTM provides a more real-time view of performance, reflecting the most current data available rather than potentially outdated figures from the previous year.

2. Can TTM be used for seasonal businesses? Absolutely! TTM helps smooth out seasonal fluctuations, enabling a more balanced view of overall performance.

3. How often should businesses report TTM figures? While it’s common to see TTM figures in quarterly reports, investors and analysts are encouraged to evaluate performance as often as possible to stay informed.

References to Online Resources

• Investopedia: Understanding TTM
• Yahoo Finance: Company Financials
• Bloomberg: Financial Analysis Tools

Suggested Books for Further Study

• “Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean” by Karen Berman and Joe Knight
• “The Intelligent Investor” by Benjamin Graham
• “A Random Walk Down Wall Street” by Burton G. Malkiel

Test Your Knowledge: Trailing Twelve Months Quiz

Thank you for exploring TTM! Remember, finance is a little like algebra: sometimes x turns out to be the most valuable number in your future! Keep learning, keep laughing, and until next time, may your stocks always rise! 📈