TTM Revenue / LTM Revenue - YouTube

hello everyone hi welcome to the channel of WallStreetmojo friends today we are going to

learn a topic that has DTM revenue to LTM revenue so at the very first and

what we can see over here is a screenshot of LTM of the last year of

the last 12 years and so on and so forth the most recent period the period prior

one I mean period ending one year prior to

the most recent one so let's understand what this thing is all about see what is

TTM revenue LTM revenue at the end of the day LTM revenue is basically

interesting concept and and every investor should look at how exactly it

works see LTM over here it stands for it means the last 12 months so this last

12 months revenue the last 12 months revenue is known as is called as your

TTM revenue which is also known as your trailing trailing 12-month or 12 months

revenue right TTM so you must have got LTM means the last 12 months revenue and

TTM means the trailing 12 months revenue now when an investor wants to understand

how a firm is doing financially he or she uses the LTM ratio or the LTM

revenue as a measurement and in most cases forms prepare their financial

report for past 12 months which which is usually 12 months we can say that and

the LTM revenue entity or the TTM revenue helps us to look at the profit

for the whole year instead of just having a brief glance on the quarterly

profit know what is good is it the LTM revenue or the quarterly revenue LTM

or quarterly revenue what is good now my one single question now which is

a better for financial analysis let's understand this by taking an example

let's say the company does company called Prince Toys Ltd and it has

some following information as TTM revenue standing at let's say $400,000

they have some quarterly revenue let's say standing at $92,000

say if an investor we just look at the last quarter for the

two quarters we would get a recent figure but the point is by looking at

the recent figures you are skipping the important consideration so by looking at

the quarterly revenue you are not able to judge I mean whether the company has

earned that revenue to do the seasonal reasons so it may so happen that you do

the festive seasons the firm must I mean firm has sold more toys than the rest of

the year so on the other hand it may say self your toys due to the labour problem

strikes etc so as an investor to understand the company's financial

health you need to look at holistically and you cannot look at partially so

that's why understanding the TTM revenue is more important than the quarterly

revenue I hope I thought I I hope I have made you understand the importance now

let's calculate the TTM revenue if you are a finance junkie junkie it would be

quite easy for you for investor who have just started out the method would be

useful to you on two bases first you would be able to calculate the LTM LTM

revenue of any year of any firm second you will be able to compare the LTM the LTM

revenue of the same or the difference form different forms whenever you get

the figure now let's look at the method of calculating the of basically

calculation of our LTM now let's say there's an ice cream company which has

some following details of 2016 and 2017 let's say from July to September it has

some following details like $50,000 from October to December

this is basically the revenue details $62,000 and from January to March

considering as the calendar year 54,000 and April to June let's say 49,000 and

July to September as 57,000 I'll quickly write Jan to March April to June and

July to September right so this are the details that we have okay we have to

join too much so find out the LTM revenue for 2016 and 2017 for June sorry

for June 2016 and and for September 2016 now all we need to do is to add up the

quarterly revenue so we will first calculate the TTM revenue for 2016 for

calculating the TTM revenue for 2016 we need to add the July to September and

October to December so we'll add a 50 I mean you need to add up the July to

September October to December January to March and an April to June here's

the calculation ($50,000 + $62,000 + $54,000 + $49,000)

so that's $215,000 now now we will calculate the

TTM revenue for September for September 2016 that was for June 2016 now we are

going to calculate for September 2016 now this is TTM for calculating the

TTM for September 2016 we need to add from October to December this value

just start adding of October to December ($62,000 + $54,000 + $49,000 + 57,000) which

comes to $222,000 so calculating the last 12 months revenue from June

2016 and September 2016 have served a purpose as an investor you can now look

at the quarterly revenues holistically and not

periodically now since the LTM revenue is averaged out the seasonal changes if

any form the quarterly revenue as a result of LTM and TTM revenue provides

more clarity to the investor before they get ever get interested to invest in the

in the company so even the balance sheet does not get affected by the last 12

months our revenue so the balance sheet is prepared at a single point of time of

time no matter what happens to out the I mean throughout the year now we'll

understand the use of this particular formula what exactly is the use which is

really more important now why in Western financial lenders use the LTM revenue

revenue here's a smaller see the last 12 months revenue is considered more recent

than the annual reports okay now if the investor looks at the annual report in

in the middle of the next year he or she would only understand what happened what

happens if during the year last year as a result the first six months of the

year will be skipped but if he or she calculates Altium revenue they would get

the most recent figure of the come second the short term measurement don't

serve investor and an financial analyst revenue for the immediate year and may

not be a big chunk of time but it serves a purpose

third the financial analyst prefers the TTM revenue because while acquisition

TTM revenue provides the most accurate evaluation of the business fourth the

last 12 months revenue allows the investor to the last 12 months the last

12 months are revenue they allow the investors to basically compare the

relative performance the relative for performance similar of the similar

companies under the same industry thank you everyone

Cheers