Are you wondering How To Calculate TTM?
How do you calculate the trailing twelve months?
How does it work?
In this article, I will break down the concept of How To Calculate TTM so you know all there is to know about it!
Keep reading as we have gathered exactly the information that you need!
Let me explain to you how you calculate TTM once and for all!
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How To Calculate TTM
Investors, traders, and financial analysts calculate TTM to get a better perspective on the company’s financial performance over a twelve consecutive month period.
There are different ways that you can calculate TTM.
Keep reading as I will tell you the different ways you can calculate a company’s Trailing Twelve Months figure.
Using Quarterly Revenues
The first method for calculating TTM is to use a company’s quarterly revenues or figures.
Publicly traded companies publish their quarterly statements every three months based on generally accepted accounting principles.
If you have access to a company’s quarterly statements, you can calculate TTM by using the following formula:
TTM = (Last Quarter) + (Second Last Quarter) + (Third Last Quarter) + (Fourth Last Quarter)
This means that you essentially take the last four quarterly reports and sum up the figures to get the company’s TTM.
For example, imagine that we are in Q2 and Company ABC had the following quarterly results:
- Q1 this year: $10M
- Q4 last year: $45M
- Q3 last year: $30M
- Q2 last year: $15M
Company ABC’s TTM is essentially Q1 + Q4 + Q3 + Q2 giving us $100M.
Using Annual And Quarterly Revenues
If you don’t have a company’s quarterly revenues for the past four quarters to calculate TTM, cou can calculate a company’s TTM in a different (but more complicated) way.
You can calculate a company’s TTM by using the following formula:
TTM = Most Recent Quarter + Last Full Year – Corresponding Quarter Last Year
Essentially, you’ll need the last quarterly figure along with the quarterly figure corresponding to the same period in the previous year, along with the company’s full-year figures.
For example, Company ABC has the following figures:
- Q1 this year: $12M
- Q1 last year: $10M
- Yearly Revenues: $100M
In this case, TTM will be $12M + $100M – $10M = $102M.
By taking the full-year revenues, adding the most recent quarterly revenue, and subtracting the corresponding quarterly revenue of the prior year, you can calculate the company’s TTM.
So there you have it folks!
It’s quite useful to calculate a company’s trailing twelve-month figures to assess its financial position and performance.
Many key performance indicators can be calculated using the TTM method, such as profit margins, liquidity ratios, and revenue growth.
The simplest way of calculating TTM is to add up the figures for the past twelve months or past four quarters.
Alternatively, you can take the previous year’s figures, add the latest quarterly results, and subtract the corresponding quarterly figures from last year.
Now that you know how to calculate TTM, good luck in your financial calculations!
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