According to the US SEC, illegal insider trading refers generally to buying or selling a security based on non-public information and breaching fiduciary duty or other relationship of trust and confidence. Insiders are allowed to buy and sell company shares, but they must register all transactions with the SEC. As you can see in the screenshot above, Company Y’s Revenue has been growing steadily over the last twelve months. Both reflect the most recent Twelve Months of EBITDA generated by a Business. Both reflect the most recent Twelve Months of Revenue generated by a Business. As a result, they tend to focus on the future performance, which is captured by Next Twelve Months (or ‘NTM’) Revenue and EBITDA.

For instance, it’s much harder to distinguish actual revenue growth from seasonal growth if you're looking at it weekly, monthly, or quarterly. TTM revenue provides a summary of the previous twelve months and can be compared to that of similar companies. It also allows you to monitor real revenue growth unaffected by seasonality. Typically, LTM financial metrics are calculated for a certain event such as an acquisition, or an investor seeking to evaluate the operating performance of a company in the prior twelve months. In finance, last twelve-month (LTM) metrics – often used interchangeably with “trailing twelve months” (TTM) – are used to measure a company’s most recent financial state.

If Companies reported a full year of Financial data with each Quarterly Report, the concept of LTM would not exist. While Quarterly data can be helpful, some companies have significant fluctuations in their Business in particular quarters within each year. The numerous interchangeable terms often cause massive confusion for newcomers. Frustratingly, in the Finance world, we seem to need multiple terms for everything. Finance professionals use LTM Calculations to analyze the previous full year of performance for a Business. Here, in our illustrative example, the LTM revenue of the company is $12 billion.

Gather Data

Another of these metrics is Trailing Twelve Months (TTM) or Last Twelve Months (LTM) revenue. It's a financial measure used to analyze the company's most recent financial performance report. However, if the company reports annual earnings in December, the winter months will have less weight, putting downward pressure on annual reported earnings. LTM fixes this issue as the same period is used, offering a fairer basis for comparison. The first step is to gather the relevant revenue data in your spreadsheet.

Calculating LTM EBITDA is a straightforward process and simple to understand as well. This method is unaffected by financial leverage and makes comparisons between businesses easy to understand and appreciate. My Accounting Course  is a world-class educational resource developed by experts to simplify accounting, finance, & investment analysis topics, so students and professionals can learn and propel their careers. Insider trading can be profitable yet it is highly unfair to other market participants, and therefore can be prosecuted. The US SEC treats the detection and prosecution of insider trading violations as one of its enforcement priorities.

This ratio presents a company’s revenues prior to any interest, tax, depreciation and amortization based on the company’s financial data of 12 months ago. Revenue can be calculated for any time period you wish to analyze or represent. For instance, financial statements are commonly prepared quarterly or annually, including the total revenue for the period. However, it’s common for companies to look at revenue much more frequently, sometimes weekly.

Get instant access to video lessons taught by experienced investment bankers. Learn financial statement modeling, DCF, M&A, LBO, Comps and Excel shortcuts. The $12 billion in revenue is the amount of revenue generated in the preceding twelve months. Suppose a company has reported $10 billion in revenue in the fiscal year 2021. It is essential to consider such factors when assessing LTM metrics; otherwise, TTM could give you a skewed picture of the company's financial health. Furthermore, acquisitions tend to happen in the middle of the fiscal year.

Difference TTM vs LTM

LTM data helps them see the latest Year of EBITDA performance for the Company to lend their money. The level of Debt that they can raise is typically expressed as a multiple of Debt to LTM EBITDA (or Debt / LTM EBITDA). Very briefly, Enterprise Value represents the Purchase Price of the entire Business.

The last twelve months is also sometimes referred to as the Trailing Twelve Months (TTM). Comparing a company’s dividend paying attributes over multiple years is an important last twelve months example. Dividend-seeking investors often analyse the dividend yield of companies over multiple twelve month periods to review their long-term dividend-paying capabilities. However, it should be noted that 12-month time periods are still considered short when examining a company’s performance and may be deemed inadequate for investment evaluations. Investors are advised to study earnings over a multi-year horizon, comparing those of the last twelve months to the previous years. However, looking at revenue in the longer term is also a good idea to get a more accurate picture of progress.

More Definitions of LTM Revenue

Finance Professionals across Investment Banking, Private Equity, and Lending (or ’Credit’) use LTM Revenue and LTM EBITDA metrics every day. We’d then look for the latest Year-To-Date Revenue data in Uber’s most recent 10-Q filing. To calculate LTM Revenue, we’d begin by finding the Company’s latest Annual Revenue in Uber’s most recent 10-K filing. Let’s imagine that we want to calculate the LTM Revenue for the ridesharing business Uber. Below we’ve included a simple, visual example of an LTM calculation on a timeline so you can more easily see how each of the pieces from the steps above come together.

Measuring the performance of two identical businesses requires some relative valuation tools. Among them, it is one such metric that helps make operational performance comparison easy to understand and appreciate for the intended user community. LTM EBITDA is the Last twelve-month Earnings before Interest, Tax, Depreciation, and amortization. It is one of the popular relative valuation metrics used for businesses’ valuation purposes in their early to medium growth stage. Type the SUM formula in the row with the current monthly revenue and select the revenue figure for that month, as well as the previous 11 months. TTM stands for ‘Trailing Twelve Months’ and it refers to calculations that show the most recent twelve months of Financial performance (e.g. LTM Revenue and LTM EBITDA).

LTM Revenue and EBITDA Calculations in 3 Steps

Many companies use the Last Twelve Months to report earnings on their financials statements providing a twelve-month reference period from the moment their financial report was issued. The tech giant’s full year report for 2021 stated total net sales of $365.81bn in the last twelve months ended 25 September. Compared to sales from the previous year, which came in at $274.5bn, it showed that Apple performed well in its 2021 fiscal year, with sales rising by $91.31bn or about 33%. The report also revealed that Apple earned over 60% more in profit in the last twelve months ended 25 September 2021 compared to 2020, indicating the company’s strong financial health in that year. Studying a company’s earnings over a 12-month period allows investors to track its performance through various seasonal business cycles.

It is also a hassle to prepare TTM since, most of the time; you will have to do the calculations on your own when looking at financial reports. To calculate it, you must work backward and compile old financial statements. For example, a company may issue its financial statements on January 31st of a given year and provide LTM figures starting from January 1st of the year prior all the way to December 31st. As you can see, when we look at the trailing twelve months, we can see the company’s performance in the most recent twelve-month reference period. Many companies will use LTM to report D/E metrics or various revenue metrics in their financial statements.

Treasury Stock Method in 3 Steps – The Complete Guide (

This calculation would present the last 12 months of financial results including the estimated impact of a specific event that occurred during the 12 month period. This specific event could be an acquisition, the launch of a new product line, or the addition of a manufacturing facility. The pro-forma LTM would be calculated to show what the financial results would have been if this specific event had been included. The Last Twelve Months (LTM) refers to the last 12 month period for a selected financial metric such as revenue, earnings, or EBITDA. For example, the LTM revenue of a company for the month of May would include the revenue from June of the prior year to May of the current year.

• However, if the company reports annual earnings in December, the winter months will have less weight, putting downward pressure on annual reported earnings.
• Last twelve month figures provide updated metrics from the typical annual and quarterly figures reported by company management.
• LTM Revenue is often a metric used to display a company's financial health over the past year.
• The tech giant’s full year report for 2021 stated total net sales of $365.81bn in the last twelve months ended 25 September.

On the other hand, LTM metrics do not offer insight into what will happen in the future. Lenders to Private Equity deals focus primarily on past performance (or ‘Creditworthiness’) to ensure they will be repaid. We could then calculate LTM EBITDA to determine the level of Debt that could be raised to fund the LBO transaction. The banker would then apply ltm revenue meaning the Peer EV / LTM EBITDA Multiple to the Client company’s EBITDA to determine the appropriate sale Valuation. An Investment Banker would typically calculate the EV / LTM EBITDA Multiple for several peer companies. One of the most commonly used metrics for Valuation in Investment Banking is the Enterprise Value / LTM EBITDA (or EV / LTM EBITDA) Multiple.

In particular, many transaction offer prices are based on a purchase multiple of EBITDA – hence, the widespread usage of the LTM EBITDA metric in M&A. A balance sheet 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. As you can see in the example below, we would calculate LTM Q1-21 by summing Q2-20, Q3-20, Q4-20, and Q1-21. We’re essentially replacing Q1-20 with Q1-21, and that allows us to compare the last four quarters ending Q4-20 to the last four quarters ending Q1-21. Universal CPA Review’s bite-sized video lectures will provide everything you need to pass the CPA exam. In this example, in Year 1, Company ABC generated $52,000,000  ($10M + $12M + $14M + $16M).

This may make comparability difficult when doing competitor analysis of stocks in the same industry. In addition, industries can be seasonal, and different years may alter the reported revenue. LTM stands for 'Last Twelve Months.' It is used by financial terminals such as Bloomberg and Yahoo Finance to show the revenue earned by a company in the last 12 months. 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.

If you’re calculating it for your own company, you have access to detailed revenue data and can calculate TTM revenue from any date, as in the example above. However, if you’re calculating it for other companies, you may only have access to quarterly figures. In that case, you can take the value for the current quarter and the three previous quarters.