Use Trailing 12 Months (TTM) to see the financial health of your company. Instead of looking only at your revenue and expenses for the current calendar year or fiscal year, you look at your numbers covering the last 12 months. In March, it is hard to understand how your company is doing if you only look at current year figures. Instead, with TTM, your reports show everything from last April through March. TTM should be used only internally; it is not an acceptable method of reporting your financial statements to the public. Also, financial institutions and banks find your TTM results useful when you apply for a loan. TTM can be more reliable than year-to-date (YTD) numbers when measuring your performance. Your reports are more consistent using TTM, especially if your business is in a seasonal industry. If you only look at your activity from January through October, you do not get a sense of holiday sales. If your company is closely tied to summer activities, only looking at calendar year activity through April doesn’t truly show how your company has been doing recently. Use TTM when budgeting or managing your cash. It is a great way to understand what fluctuations happened over the last 12 months. Because TTM gives you more information than other reporting methods, you’re better equipped to plan for the next year ahead, regardless of where you are in the current calendar. Use TTM any time to know how your company has performed in the past 12 months and what the next 12 months may look like. The flexibility of this reporting method gives you a better idea of your operations and helps you make better decisions.
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.