What it means
Public companies report financial results every quarter, which is a three-month period. The most recent quarter is the last one for which accounts have been published.
Data labelled MRQ therefore reflects the newest available information, while data labelled with a year refers to the full financial year. MRQ is common on stock screening websites and in valuation work.
For measures such as the current ratio or debt levels, which are balance sheet figures taken at a point in time, MRQ shows the position at the end of the latest quarter. For income statement figures, such as revenue, MRQ shows what was earned over those three months alone.
A common comparison is between MRQ and TTM, which stands for trailing twelve months, the sum of the last four quarters. TTM smooths out seasonal swings, whereas MRQ shows the latest trend.
Using both together gives a fuller picture of whether a business is accelerating or slowing. There are cautions.
A single quarter can be affected by seasonal patterns, one-off events or timing, so multiplying it by four to estimate a year can mislead. A retailer, for example, earns far more in the holiday quarter than in other quarters.
Another point is timing. The most recent quarter might already be several weeks or months old by the time results are published, so it may not reflect more recent events.
Check the date of the report and any later announcements.
In practice
Real-world examples.
Example
An investor screens for companies with a current ratio above 1.5 on an MRQ basis. The tool pulls the balance sheet figures from each company's latest quarter. She shortlists those that pass and reads their reports to check that no unusual item distorted the latest quarter.
Example
A credit analyst reviews a borrower's debt-to-equity ratio using MRQ figures. The latest balance sheet shows that debt has risen sharply since the year end. She asks the borrower to explain the increase before approving a new facility, and she compares the answer with the cash flow statement.
Example
A finance manager compares the MRQ profit margin of her company with the average of its competitors. Hers is 8% against a peer average of 11%, a gap of 3 percentage points. She uses the gap to start a review of costs, beginning with the largest expense lines such as staff and rent.
Formula
Calculation
Trailing Twelve Months (TTM) = Sum of the last four quarters
Annualised MRQ = MRQ x 4
Suppose a company reported quarterly revenue of $1,200,000, $1,300,000, $1,400,000 and $1,500,000, with the last being the MRQ. TTM revenue = 1,200,000 + 1,300,000 + 1,400,000 + 1,500,000 = $5,400,000. Annualised MRQ = 1,500,000 x 4 = $6,000,000, which is $600,000 higher than TTM because revenue has been growing through the year. Neither figure is wrong, but they answer different questions: TTM describes what the company earned over the last year, while annualised MRQ describes the current run rate if nothing changes.Case study
Seen in the real world.
Seaside Toys is an illustrative, fictional retailer that earns most of its profit in the holiday quarter. An analyst saw that the MRQ revenue, covering the holiday period, was $9,000,000.
Multiplying by four gave an annual estimate of $36,000,000. In fact, the other three quarters averaged only $3,000,000, so the true annual figure was 9,000,000 + 3 x 3,000,000 = $18,000,000.
The analyst corrected the forecast by using TTM and comparing each quarter with the same quarter a year earlier, which removed the seasonal distortion. The corrected valuation was about half the first estimate. The illustrative lesson is that MRQ is a useful snapshot, but annualising a single quarter can be badly wrong in seasonal businesses. The analyst now notes the quarter and the season beside every figure in her reports.
Watch out
Common mistakes.
- Multiplying MRQ by four to get a year, when seasonal businesses can make this far too high or too low.
- Assuming MRQ is always the same date for every company, when companies have different financial calendars and report their quarters at different times of the year.
- Comparing MRQ with the previous quarter instead of the same quarter last year, which ignores seasonal patterns and can make normal swings look like trends.
Questions
People also ask.
What does MRQ mean on a stock screener?
It means the figure comes from the most recently reported quarter, giving the freshest data available, although it may still be several weeks old when you read it.
What is the difference between MRQ and TTM?
MRQ covers the latest three months, whereas TTM adds up the latest four quarters to give a full year of data.
Why do balance sheet ratios use MRQ?
Because balance sheet figures are a snapshot at a date, the latest quarter-end gives the most current position, whereas an annual figure may be many months out of date.
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