TTM means Trailing Twelve Months. It’s a term used to describe the past 12 months of consecutive financial or performance data for a business.
Another name for TTM is Last Twelve Months (LTM). TTM is used to analyze the most recent data rather than relying on the last fiscal year’s numbers.
TTM differs from Year to Date (YTD), a term used to describe the period from the beginning of the ongoing fiscal year to the current date. YTD can be less than 12 months, while TTM is always 12 months.
Why is TTM used?
TTM is a helpful way to look at the financials of a small business. It removes the issue of using outdated fiscal financial numbers. Without using a TTM calculation, the annual data from the most recent fiscal year could be nearly a year out of date. TTM uses the most recent 12 month period to give more accurate numbers for the current state of the business.
TTM also helps smooth out the ups and downs that can occur with seasonal data or one-off changes. For instance, a business may have higher revenue over the summer, or a one-off event may cause its revenue to drop during a quarter. Using TTM gives you a longer view of business performance while ensuring that your financials are adjusted for seasonal variations and are current.
How is TTM used?
Small businesses use TTM to get accurate financial figures for lenders and investors. External parties can evaluate the state of the business within the past consecutive 12 months without waiting for the next fiscal reporting period to end.
TTM is also used for ongoing business planning, identifying internal business trends, monitoring growth and changes, and comparing your business to relevant competitors. TTM can also be used to show how close your business is to meeting key performance indicators (KPIs) and metrics within the trailing 12-month period.
Where do you find TTM data?
The data needed to calculate TTM is within the various reports used in your financial accounting. Balance sheets, income statements, cash flow statements, and other financial reports can provide the data needed to pull together TTM reporting figures, such as:
- TTM revenue: the total revenue earned over the trailing 12 months
- TTM cash flow: the money coming in and out of the business over the trailing 12 months
- TTM accounts receivable turnover ratio: the number of times an account receivable balance is collected over the trailing 12 months
How do you calculate TTM?
There are a few different ways to calculate TTM. You can use the most recent complete 12 months or the last four complete quarters. You can also use the fiscal year, current YTD and prior YTD data, where you add the fiscal year and current YTD and subtract the prior YTD.
See related terms
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.