TTM (Trailing Twelve Months)

Definition

The most recent twelve months, rolling, whatever the fiscal year says.

Why It Matters

Trailing figures catch the trajectory a year-old tax return hides, and a business running well below its prior fiscal year is declining no matter how the annual statements read. Ask which months the window covers before comparing anything, because a seasonal business can be made to look like it is growing purely by choosing where the twelve months start. The safest read is the trailing period beside the same period a year earlier, not beside the last full year.

In numbers: A business that earned $420k over the trailing twelve months but $360k in the last calendar year is priced on the $420k; the fresher window is the fair one when momentum is real, and the flattering one when it is not.