LTM Revenue

What is LTM Revenue?

LTM stands for “Last Twelve Months” and is similar in meaning to TTM, or “Trailing Twelve Months.” LTM Revenue is a popular term used in the world of finance as a measurement of a company’s financial health. It reports or calculates the revenue figures for the “past 12 months.” LTM or TTM Revenue shows a company’s performance in the past year rather than just seeing the quarterly figures and adjusting it for the full year.Fiscal Year (FY)A fiscal year (FY) is a 12 month or 52 week period of time used by governments and businesses for accounting purposes to formulate annual financial reports. A Fiscal Year (FY) does not necessarily follow the calendar year. It may be a period such as October 1, 2009 – September 30, 2010.

It is possible that a certain quarterly period may be good or bad because of several factors, such as seasonal impact, labor problems, high sales during the festive season, etc. LTM figures are used to average out the effects so proper conclusions can be reached.

A balance sheetBalance SheetThe balance sheet is one of the three fundamental financial statements. These statements are key to both financial modeling and accounting. The balance sheet displays the company’s total assets, and how these assets are financed, through either debt or equity. Assets = Liabilities + Equity is never affected by this calculation, as a balance sheet is prepared on a certain date and at a single point of time, regardless of the events throughout the year.

Example of LTM Revenue

For the period ending August 2017, the LTM period will be from “September 2016 to August 2017.”

The LTM revenue is used especially by analysts and acquirers while valuing the firm or rating it as Overweight, Neutral, etc., as they want to see the company’s growth potential and performance in relation to its peers.

LTM Revenue for September 2016: 100 + 120 + 140 + 150 = 510

LTM Revenue for December 2016: 120 + 140 + 150 + 200 = 610

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Why do Analysts use LTM Figures?

• 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.
• LTM figures can be used to compare the relative performance of similar companies within an industry or sector.
• LTM figures provide a more accurate value of a business in the event of an acquisition.
• LTM gives a relevant measurement of P/E ratio.

Related Readings

To learn more about financial analysis, see the following resources from CFI.

• Revenue Run RateRevenue Run RateRevenue Run Rate is an indicator of financial performance that takes a company's current revenue in a certain period (a week, month, quarter, etc.) and converts it to an annual figure get the full-year equivalent.  This metric is often used by rapidly growing companies, as data that's even a few months old can understate the current size of the company. guide, example, formula
• Revenue Recognition PrincipleRevenue Recognition PrincipleThe revenue recognition principle dictates the process and timing by which revenue is recorded and recognized as an item in a company's financial statements. Theoretically, there are multiple points in time at which revenue could be recognized by companies.
• Analysis of Financial StatementsAnalysis of Financial StatementsHow to perform Analysis of Financial Statements. This guide will teach you to perform financial statement analysis of the income statement, balance sheet, and cash flow statement including margins, ratios, growth, liquiditiy, leverage, rates of return and profitability.
• Sales RevenueSales RevenueSales revenue is the income received by a company from its sales of goods or the provision of services. In accounting, the terms "sales" and "revenue" can be, and often are, used interchangeably, to mean the same thing. Revenue does not necessarily mean cash received.