Trailing Twelve Month TTM Data

TTM when applied to financial statements data means "Trailing Twelve Months”. What this means is that when there has been a recent interim results announcement, those results are incorporated into our computations to create a more up to date 'trailing twelve month' period. This should be contrasted with the last annual results data (which so many financial websites use) which can become very out of date as a company reports through the year.

Why is TTM data useful?

Investors need data that is as up to date as possible. Companies report their full results only once per year which is when most vendors of financial information update their data sets. Additionally, due to the rigour of accounting and auditing results, these numbers are often not released for three or four months after the actual year end. This means that end of year financial data can be up to 15 months old by the end of the next accounting period. How can any sensible investor make wise investment decisions based on 15 month old data?

If you want to know the P/E ratio, EPS Growth rate or Return on Equity of a stock, you need to know that the numbers are as up to date as possible. If a company has fallen on hard times during the interim or quarterly reporting period then the ratios should reflect that. If the company's debt levels have soared or financial health deteriorated according to key ratios like the Altman Z-Score then, again, you need to know that and act on it quickly.

What we've done

We decided to tackle this problem head on by upgrading all our key fundamental ratios to include any quarterly or interim data that has been reported. Ratios built on such a data set are known as 'TTM' (trailing twelve month) ratios in the industry and have for the most part been very unavailable on websites.

Some websites do quote a few TTM ratios but never to the extent that we are making them available. Our entire codebase has been written to enable TTM calculations across not only all financial statements, but also across all our scoring systems (F-Score, Z-Score, M-Score), rankings and our growing library of the best stock screening strategies on the web.

How we calculate TTM data

The approach on Trailing Twelve Month ratio calculation ("TTM" - as opposed to last reported annual results which we call "RA") is as follows:

  • For Balance Sheets, we simply take the latest available balance sheet - in some cases, this will be the last reported quarterly or interim statement (RQ), in other cases, it will be the annual statement (RA).

  • For Income Statements, we go back in time 12 months depending on the reporting frequency. Some UK companies report quarterly, most companies report on an interim (or semi-annual) basis. If it's quarterly, then we would take the last 4 quarterly values and sum them. In the case of a 6 month company, we would sum 2 periods, not 4.

  • For Cashflow Statements , as quarterly statements are cumulative, i.e. 3 months, 6 months, 9 months and 12 months (assuming the company reports quarterly) we sum and subtract periods accordingly to arrive at the correct figure.

  • Cashflow Statement Example: If the latest cashflow statements is 12 months, then we can use that. If however, the latest version is say 9 months, we have to take the 9 month statement from this year, and add to that the last 3 months of last year (which will be last year's 12 month cumulative statement minus the 9 month cumulative statement). If it is a company that reports on an interim basis and it has just put out its interim cashflow statement, we would add that to the last half of last year, which we get by subtracting last year's year-end statement from the previous interim statement.

We do this for each underlying fundamental item, and then we build the ratios on that basis so that, for example, Price to CashFlow becomes Price to Cashflow TTM. Where needed, we also calculate the Prior TTM value for year on year comparisons, which we call PTTM.

The one thing to be aware of is that the level of disclosure available in quarterly and interim reporting is sometimes not as good as in the annual report. That means that where the company has just reported its annual (i.e. TTM equals RA), we return the annual report (i.e. RA) value - they should be identical in any case but where they are not, the annual report value is preferred.

Please note that the equivalent of prior year on a TTM basis is called PTTM.