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The Power of 12
When it comes to accounting and finance, numbers are the map of everything. One number, in particular, commonly finds the spotlight—the number 12. It’s particularly vital to accountants, marking the 12 months in a fiscal year, but beyond that, it plays a key role in some of the most valuable tools for business analytics.
Trailing Twelve Months (TTM) reporting is a crucial part of any financial toolkit, a resource that offers unparalleled clarity into a company’s financial performance. In a recent article for the Moore North America newsletter, Mowbrey Gil’s Ian J. Adair, CPA, CA, explores how TTM reporting helps businesses uncover trends and make informed decisions.
Key Insights
TTM is far more than just the traditional monthly or quarterly financial statements. It focuses on a twelve-month period, providing a detailed vision of performance, evening out seasonal fluctuations and exposing underlying trends.
Ian’s article outlines the transformative potential of TTM reporting in three critical areas:
- Trend Identification: Thanks to TTM reporting, seasonal fluctuations in monthly or quarterly results are made easier to understand, and businesses can see underlying patterns in revenues, margins, and key cost drivers.
- Enhanced Strategic Decision-Making: TTM offers a thorough scope of performance over time, bringing more clarity that is often missed with traditional reporting methods.
- Addressing Reporting Limitations: TTM garners the full spectrum of performance across fiscal year boundaries, bridging the gaps that conventional reporting leaves behind.
The article provides compelling examples, such as the post-COVID demand surge and the risks associated with unchecked market expansion, showcasing the significance of TTM reporting in real-life situations.
Using TTM Reporting
Many industries use TTM Reporting for its versatility and value, which are highlighted in Ian’s article. For example, in Mergers and Acquisitions, TTM reporting creates the analysis of revenue, expenses, and profitability over multiple years.
Financial institutions also leverage TTM to assess creditworthiness and analyze risk trends. Beyond the world of finance, the analysis generated from TTM reporting is used in health and safety contexts to help track incidents and near-misses over time.
Our Perspective: Empowering Businesses with TTM Reporting
As Ian’s article highlights, TTM reporting allows businesses to uncover trends and gain clarity. Over the past couple of years, at Mowbrey Gil, we have yet to review a client’s TTM trending that does not highlight trends or areas within the organization that require further monitoring or immediate action. These trends go beyond the income statement and affect the cash flows, the financial position, and the condition of the organization’s operations.
We believe this is a valuable reporting tool and should be considered by all business leaders and entrepreneurs to assess where they have been, where they are and where they are going – in fact, for some of our clients, it made a difference in leading towards improvements in their financial strategy.
We’re Here to Help You
Despite common belief, TTM Reporting is not just for large-scale transactions or credit reviews. It’s a powerful tool that can become vital to your monthly reporting strategy, growing actionable insights, ultimately building your business and moving it forward.
Contact us today at 780.461.3800, and our team will help you implement TTM analysis to enhance your decision-making capabilities.
We are proud to showcase this article written by our very own Ian J. Adair, CPA, CA and his dedicated examination of this important topic. His insights highlight this critical tool and its role in modern financial management.
You can read the full article here.
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