Trailing 12 Months
Trailing 12 Months (TTM) is a financial term that measures a company's performance over the past 12 consecutive months.
This calculation is not limited to the company's fiscal year and can provide more timely performance data, applicable for calculating various financial metrics such as earnings, Earnings Per Share (EPS), Price-to-Earnings Ratio (P/E), and yield.
Definition:
Trailing Twelve Months (TTM) is a financial term used to measure a company's performance over the past 12 consecutive months. TTM calculations are not confined to the company's fiscal year, providing more timely performance data. It is used for calculating various financial metrics such as revenue, Earnings Per Share (EPS), Price-to-Earnings (P/E) ratio, and yield.
Origin:
The concept of TTM originated in the field of financial analysis to provide more timely and dynamic company performance data than annual reports. As investors' demand for real-time data increased, TTM became a commonly used analytical tool.
Categories and Characteristics:
TTM is primarily used for the following types of financial metrics:
- Revenue: TTM revenue reflects the company's actual operating conditions over the most recent 12 months.
- Earnings Per Share (EPS): TTM EPS helps investors more accurately assess a company's profitability.
- Price-to-Earnings (P/E) Ratio: P/E ratio calculated using TTM data provides a more timely valuation reference.
- Yield: TTM yield reflects the company's investment return over the most recent 12 months.
Specific Cases:
Case 1: Suppose a company releases its financial report on September 30, 2023, showing total revenue of $50 million over the past 12 months. Investors can use this TTM data to evaluate the company's current performance rather than waiting for the next annual report.
Case 2: An investor checks a company's TTM EPS data on September 12, 2024, and finds it to be $2. By dividing the current stock price by the TTM EPS, the investor can calculate the company's P/E ratio to determine if its valuation is reasonable.
Common Questions:
1. Is TTM data more accurate than annual data?
TTM data provides more timely performance information but is not necessarily more accurate than annual data. Each has its pros and cons, depending on the analysis purpose.
2. How can I obtain TTM data?
TTM data can usually be calculated from a company's quarterly financial reports or obtained through financial data service providers.
