In finance, TTM is determined by a company’s previous 12 months of production. Short for Trailing Twelve Months, TTM uses the income statements from a business to offer some insight into the direction they are heading.
Unlike annual financial statements or end-of-year analyses, TTM can be calculated at any time in the year and can provide forecasts based on current numbers. Calculating TTM grants seasonality understanding, eliminating the fluctuations that come with different times of the year, and helps one realize how much growth has occurred.
TTM is also advantageous because it provides accurate, up-to-date financial information at any time you need it. There are two main methods for calculating TTM, and they’re both relatively simple and self-explanatory.
This is the easiest method for calculating TTM, as it involves nothing but basic addition. Use the last four quarterly cash flow statements or income statements from the past 12 months to determine a company’s financial performance and TTM.
This way is a bit more complicated, but for some companies, it provides the most accurate TTM calculation. The formula is as follows:Most Recent Quarter + Last Full Year - Corresponding Quarter Last Year = TTM