What is TTM (Trailing Twelve Months)?
The Short Answer
TTM (Trailing Twelve Months) explained simply
TTM stands for "Trailing Twelve Months." It’s a way to look at a business's financial performance over the most recent 12-month period. This period is always rolling forward, meaning it updates each month. For example, if it's June 2024, the TTM would cover July 2023 to June 2024. It’s used for things like revenue, profit, or cash flow. TTM is important because it gives you a current picture of a business's health, smoothing out seasonal ups and downs.
Real-World Example
TTM in Action: The Coffee Shop
Imagine a coffee shop. Their fiscal year ends in December. If you're looking at their financials in September 2024, their last full fiscal year data would be for 2023. But TTM would show you the performance from October 2023 to September 2024. This gives a more up-to-date view than just looking at the last calendar year. If the coffee shop made $500,000 in revenue from October 2023 to September 2024, that's their TTM revenue.
Why this matters
TTM matters because it gives you the most current and relevant financial data for a business. It helps buyers and sellers see recent trends and performance, which is key for valuation. It also smooths out seasonal variations, giving a clearer picture of a business's true earning power.
When you're looking at a business, always ask for TTM financials. It gives you the freshest data and helps you spot recent changes in performance.
When you're looking at a business, always ask for TTM financials. It gives you the freshest data and helps you spot recent changes in performance.
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