Financial Modeling Question - Using TTM for latest fiscal year but not prior years?

i'm working on a financial model, dcf, and write up with the hopes of attaching it to applications in the future, however, the company i am choosing to build a model/write up on went public last year and is showing a lot of growth (i bought the stock since IPO and have done well on it - haven't built models for any of my personal investments), therefore, i do believe using the latest quarter financials (ttm/ltm) will best reflect the growth/current standing of the business.

i am not sure if it is frowned upon/bad practice to use ttm/ltm for the current year but complete year annual amounts for the last two, prior years? i know there is a seasonality component to be mindful of and i will be clearly identifying the columns/cells using ttm/ltm but is there anything else i should be aware of? what you would do in this situation?

essentially i will be projecting the next 5 years using the latest quarter's ttm/ltm and showing growth historically vs different periods.

i asked chatgpt and was advised to build both the latest annual and latest quarter ttm/ltm side by side (seems a bit excessive/tedious for applications) or just use the latest complete year (only 1Q into the current year as well so far) but i wanted to ask/confirm with the professionals/experts here, not sure if i am overthinking this. thank you.

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2 Comments

Mike_wacczowski76

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try and always use TTM because it usually provides the most accurate data. since it is such a new public company I would forcast the first 2 years quarterly because it will probably have different growth or assumptions as it starts to settle or take off in the market. use TTM for income statement and just most current for balance sheet with calculating ratios. Also for your Write up make sure you defend the assumptions you use. also found this structure online that I like so Ill share it.

Conclusion up front: I am (don’t say “we”) long TICKER, market cap and price target, and % upside, implied IRR % over what time horizon
How did you get to your price target (multiple of future earnings/EBITDA/FCF, SoTP (sum of the parts), etc.)
What does the company do, how does it make money, what’s the industry structure and how the company fits into the industry?
Summarize the 2-3 theses points on the stocks up front. All theses need to affect the fundamental forecast and/or valuation.
Dive into thesis points and provide evidence of research and numbers to support points – be sure to clearly explain how your view differs from consensus (i.e. the market); Focus most of your energy on fundamentals rather than multiple expansion.
Summarize valuation (including slightly more detail than upfront), and conclude by reiterating your price target and % upside
Include a financial summary and your model

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Financial Modeling Question - Using TTM for latest fiscal year but not prior years?

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