What Is Trailing 12 Months (TTM)?

Trailing 12 months (TTM) is the term for the data from the past 12 consecutive months used for reporting financial figures. A company's trailing 12 months represent its financial performance for a 12-month period; it does not typically represent a fiscal-year ending period

Analysts often use TTM to analyze data from financial statements, such as the balance sheet, income statement, and statement of cash flows. However, the methodology of TTM calculations may differ per financial statement.

The Basics of TTM

Some analysts report earnings every quarter, while others report earnings once a year. However, what about measures that change on a daily basis, such as stock price? What if you want to compare today's stock price to a measure that's only reported annually and updated once a quarter, such as the price-to-earnings ratio?

In this case, analysts use the last trailing 12 months (TTM) for a more relevant measure. The annual period is not current, and the quarterly period may skew performance results. The last 12 consecutive months provides investors with a compromise that is both current and seasonally adjusted.

TTM figures can also be used to calculate financial ratios. For example, the price/earnings ratio is often referred to as P/E (TTM), which is calculated as the stock's current price divided by a company's trailing 12-month earnings per share (EPS).

Much of fundamental analysis is about comparing a measurement against a like measurement from a prior term to see how much growth was realized. For example, a company reporting $1 billion in revenues is impressive. However, consider that the same company's revenues increased from $500 million to $1 billion within the last 12 months; the marked improvement provides more information about the degree of growth.

Where to Find the TTM

For line items on the balance sheet (e.g., cash, property, and liabilities), the 12-month measure is taken from the most recent balance sheet, which is often updated quarterly. Some analysts take an average of the first quarter and the last quarter.

Income statements often report income monthly, quarterly, or semi-annually. For line items on the income statement (e.g., revenues, expenses, and net income), analysts either sum the last 12 months, the most recent four quarters, or the last two semi-annual terms depending on the frequency of reporting.

Annualized data is important because it helps neutralize the effects of seasonality and dilutes the impact of non-recurring abnormalities.

Line items on the cash flow statement (e.g., working capital, capital expenditures, and dividend payments) should be treated based on the feeding financial statement. For example, working capital is compiled of balance sheet line items, which are averaged. However, depreciation is deducted from income on a quarterly basis; so analysts look at the last four quarters as reported on the income statement.

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Trailing 12 Months

Key Takeaways

  • Trailing 12 months (TTM) is the term for the data from the past 12 consecutive months used for reporting financial figures.
  • A company's trailing 12 months represent its financial performance for a 12-month period; it does not typically represent a fiscal-year ending period.
  • The last 12 consecutive months provides investors with a compromise that is both current and seasonally adjusted.

An Example of TTM

In the context of equity research and valuation, financial results for publicly traded companies are only released on a quarterly basis in securities filings in accordance with generally accepted accounting principles (GAAP). Less frequently, firms provide monthly statements with sales volumes or key performance indicators.

Securities and Exchange Commission (SEC) filings generally display financial results on a quarterly or year-to-date basis rather than TTM. To get a clear picture of the last year of performance, analysts and investors often must calculate their own TTM figures from current and prior financial statements.

Consider General Electric (GE)'s recent financial results. In Q1 2015, GE generated $29.4 billion in revenue versus $34.2 billion in Q1 2014. GE logged $148.6 billion of sales for the full year of 2014. By subtracting the Q1 2014 figure from the full-year 2014 figure and adding Q1 2015 revenues, you arrive at $143.8 billion in TTM revenue.