Last Twelve Months (LTM)

The last twelve months (LTM) is an accurate time frame that indicates the most recent business values and trends.

What is the Last Twelve Months or LTM?

The last twelve months, also known as the trailing or rolling twelve months, is a measurement of time that illustrates a company’s business performance preceding the immediate LTM time frame. This is not necessarily related to a fiscal year period, as the LTM references any period that ends on last day of the month dated on the financial statement. For instance, a statement of income that is dated May 2015 would cover the last twelve months leading up – June 1, 2014 to May 31, 2015.

How to Generate the Last Twelve Month Figures from Financial Reports?

In order to determine LTM figures, one would use the annual and last quarterly reports of a company as measurement. Items on the income statement for that reporting period can be added together, subtracting the items whose figures match the previous year.

LTM revenue = Most recent quarter figures + most recent annual figures – figures in the corresponding quarter 12 months before the most recent quarter. Alternatively, if one has access to full monthly data, then one can simply utilize the collection of the last twelve months data.

To illustrate:
A company reported a quarterly revenue of $5M on 3/31/2015, $15M yearly revenue on 12/31/2015, and $8M quarterly revenue on 3/31/2016. To generate the last twelve months figures ending 3/31/2016 the amount of revenue generated is $18M ($8M+$15M-$5M).

Why do Analysts and Policymakers use LTM?

  • LTM is considered useful in assessing the most recent business performance indicative of the company’s current trend.
  • LTM figures are more current than the fiscal or annual financial statements which helps avoid potentially misleading short-term measurements.
  • Compares relative performance of similar companies within an industry or sector.
  • LTM figures provide a more accurate value of a business in the event of acquisition
  • LTM gives a relevant measurement of price to earnings ratio.

LTM figures for US-based companies can be easily calculated by using a company’s 10-K and 10-Q SEC filings.

Learn More

Learn more about the use of the rolling twelve month time frame in these contexts:

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