Last Twelve Months (LTM)

What is LTM?

Last Twelve Months (LTM), also called Trailing Twelve Months (TTM), is a rolling 12‑month period used to evaluate a company’s recent financial performance. LTM figures typically aggregate the most recent four quarters (or the 12 months ending on the date of a financial statement) to present current metrics such as revenue, earnings, and dividend yield.

Why use LTM?

• Captures the most recent business performance while smoothing seasonal effects.
• Excludes older data that may no longer reflect current operations.
• Provides updated metrics between quarterly and annual reports, which is useful for timely analysis and valuation.

Common uses

• Valuation ratios (e.g., P/E using LTM earnings).
• Comparing peer companies within the same industry.
• Assessing dividend yield over the past year (often compared with SEC yield).
• Due diligence for mergers and acquisitions, where recent performance gives a better sense of current value than the latest fiscal‑year numbers.

How LTM is calculated

Basic approach:
* LTM = sum of the most recent four quarters (e.g., Q1 + Q2 + Q3 + Q4).

Alternative for overlapping fiscal periods:
* If using year‑end financials plus quarterly updates, adjust by adding the most recent interim quarter and subtracting the corresponding quarter from the prior fiscal year to avoid double‑counting.

Example:
* Quarterly revenues of 50, 60, 55, 65 → LTM revenue = 230.

Practical considerations and limitations

• One‑time items: LTM can include nonrecurring gains or losses that distort the trend—adjust metrics for one‑offs when necessary.
• Structural changes: Recent acquisitions, divestitures, or business shifts may make LTM less representative of future performance.
• Restatements and accounting changes can alter LTM comparability across periods.
• LTM is not a substitute for forward‑looking projections; combine it with forward estimates and normalized adjustments for valuation or forecasting.

Key takeaways

• LTM provides a timely, seasonally adjusted view of recent financial performance by aggregating the most recent 12 months.
• It’s widely used for valuation, peer comparison, dividend assessment, and transaction analysis.
• Always check for one‑time items, structural changes, and accounting adjustments when relying on LTM figures.