# Interim Financial Statements & Calculating Trailing 12 Months (TTM)

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## What Are Interim Financial Statements?

Interim financial statements are financial statements covering a period less than one year. They are usually prepared on a year-to-date (YTD) or quarterly basis; however, they can also be prepared for an individual month. Interim financial statements can include the income statement, statement of cash flows, as well as the balance sheet (for the last day of the period). They are an important report for business owners, financial analysts, investors, bankers, and other financial professionals when assessing business performance.

## Interim Financial Statements vs. Annual Financial Statements

Interim financial statements can contain the exact same information as annual financial statements. The main difference is that interim statements cover less than a year and annual statements cover a full year. Although annual financials are incredibly helpful, they are not always current.

Pretend it’s August 2021 and and you’re a commercial banker looking to analyze the business performance of a prospective borrower. At this point, year-end financials from fiscal year 2020 may not be relevant, especially in times of uncertainty such as an economic crisis. Instead, you would likely request YTD financials, from January to August.

It is noted that interim statements are most often of lower quality than annual statements and don’t include physical inventory counts, disclosures, or an external audit like year-end statements typically do.

## How To Calculate Trailing 12 Months (TTM)

It’s always a good idea to have the most recent 12 months of financial information for your business on hand. You can use trailing 12 Months (TTM) to calculate your revenue, profit, or EBITDA over the past 12 months.

To calculate TTM, you need 3 sets of financial information:

• Last year’s YTD interim
• Year-end income statement
• This year’s YTD interim

Use the following formula: (Year-end) – (Last year) + (This year)

If you would like to calculate revenue over the last twelve months, let’s say from July 31, 2020 to July 31 2021, you would need an interim statement dated 7/31/2020, a year-end statement dated 12/31/2020, and an interim statement dated 7/31/2021.

If you subtract the revenue through 7/31/2020 from revenue through 12/31/2020, you would be left with the revenue earned from 8/1/2020 to 12/31/2020, which is 5 months. You would then add the 7 months of revenue from the 7/31/2021 interim statement, leaving you with 12 months of revenue.

Here’s an example:

• Revenue earned on 7-month interim statement ending 7/31/2020: \$750,000
• Revenue earned on 12-month year-end statement ending 12/31/2020: \$1,250,000
• Revenue earned on 7-month interim statement ending 7/31/2021: \$500,000

7/31/2021 TTM Revenue = \$1,250,000 – \$750,000 + \$500,000 = \$1,000,000