Navigating Business Rapids - The CFO-Pro Newsletter

A CEO recently told me his company's sales fluctuated from month to month. He was concerned because he could never tell if they were making progress in sales growth until the end of the year.

This is just the type of situation that calls for the Trailing Twelve Months (TTM) tool. When you look at revenues month to month, normal business cycles can hide trends-either positive or negative. With a TTM you can easily spot trends, especially in revenues.

A TTM is a rolling annual total tracked monthly. Each total (or point) covers the previous 12 months and is, therefore, comparable to every other point. So a TTM is a moving measurement of the past year.

Because a TTM eliminates seasonality, charting it will show you at a glance if your numbers are moving in a positive or negative direction. If the numbers trend downward, it's time to investigate and find out why.

Take a look at your monthly revenue history over the past 3 years and calculate a rolling annual total for each month. Chart the totals and look at the trend lines. Did you notice the trends at the time? If not, give some thought to possible causes and ways to take corrective action in the future.

Continued use of TTM will keep you on top of critical numbers as your business changes and markets shift.

On a Musical Note

John Lafferty sings tenor in a Barbershop Quartet known as Vocal Menu. The group sings competitively and also performs for groups. Contact me if you are looking for a classic and classy sound for your next event.

Every other month, Navigating Business Rapids provides financial tools that improve bottom-line results and build business equity.

CFO-Pro can assist you in implementing these tools in your business. We specialize in identifying the causes of negative trends and ways to take corrective action.

Feel free to forward this newsletter to others and send us your questions or suggestions for future issues. Free subscriptions are available on our website, CFO-Pro.com, from the Newsletter page.

Wisdom • Insight • Experience
(630) 778-7646 • (800) 724-4578 • JLafferty@CFO-Pro.com


Navigating Business Rapids with John Lafferty, CFO-Pro
September 2007 Issue #1 "Success is measured not so much by the position that one has reached in life as by the obstacles which he has overcome while trying to succeed." - Booker T. Washington	The "Trailing Twelve Months" Tool A CEO recently told me his company's sales fluctuated from month to month. He was concerned because he could never tell if they were making progress in sales growth until the end of the year. This is just the type of situation that calls for the Trailing Twelve Months (TTM) tool. When you look at revenues month to month, normal business cycles can hide trends-either positive or negative. With a TTM you can easily spot trends, especially in revenues. A TTM is a rolling annual total tracked monthly. Each total (or point) covers the previous 12 months and is, therefore, comparable to every other point. So a TTM is a moving measurement of the past year. Because a TTM eliminates seasonality, charting it will show you at a glance if your numbers are moving in a positive or negative direction. If the numbers trend downward, it's time to investigate and find out why. Using Your Own TTM Take a look at your monthly revenue history over the past 3 years and calculate a rolling annual total for each month. Chart the totals and look at the trend lines. Did you notice the trends at the time? If not, give some thought to possible causes and ways to take corrective action in the future. Continued use of TTM will keep you on top of critical numbers as your business changes and markets shift. On a Musical Note John Lafferty sings tenor in a Barbershop Quartet known as Vocal Menu. The group sings competitively and also performs for groups. Contact me if you are looking for a classic and classy sound for your next event. About Navigating Business Rapids Every other month, Navigating Business Rapids provides financial tools that improve bottom-line results and build business equity. CFO-Pro can assist you in implementing these tools in your business. We specialize in identifying the causes of negative trends and ways to take corrective action. Feel free to forward this newsletter to others and send us your questions or suggestions for future issues. Free subscriptions are available on our website, CFO-Pro.com, from the Newsletter page. Wisdom • Insight • Experience (630) 778-7646 • (800) 724-4578 • JLafferty@CFO-Pro.com
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