TTM stands for Trailing Twelve Months in Finance, based on the article “What Does TTM Mean?
What is TTM?
Trailing Twelve Months (TTM) is a company’s consolidated report for the past 12 consecutive months.
How is it derived?
Trailing Twelve Months (TTM) is derived from a company’s quarterly or annual reports.
What is TTM used for?
Trailing Twelve Months (TTM) measures a ccompany’sfficompany’serformance, i.e., income and expenses.
Why is TTM extremely useful for investors?
Trailing Twelve Months (TTM) is extremely useful for investors because it provides the latest annualized numbers and factors out the seasonal volatility of quarterly numbers.
Investors must remember that the Trailing Twelve Months (TTM) may or may not coincide with the fiscal year sending period.
How can you calculate it?
Suppose Amazon has released the Q2 reports of 2020.
To calculate the Trailing Twelve Months (TTM) for Amazon, you need to have the following:
- 2019’s Q3 an2019’s Q3 and Q4.n22020’s Q1 and Q2. Trailing Twelve Months (TTM)= Q (latest) + Q (1 quarter ago) + Q (2 quarters ago) + Q (3 quarters ago)
In Amazon’s case, be:
Q2 (2020) + Q1 (2020) + Q4 (2019) + Q3 (2019)= Trailing Twelve Months (TTM)
Advantages & Disadvantages of Trailing Twelve Months (TTM):
Advantage:
It helps investors and financial institutions scrutinize a company based on the latest 12-m12-months-f12-months performance, which is an advantage:
Businesses that encounter volatile seasons might face a problem in deriving TTM because the values of their financial data can change quickly.
After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management.
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