What does 'Last Twelve Months - LTM' mean
Last twelve months (LTM), also commonly designated as trailing twelve months (TTM), indicates the time frame of the immediately preceding 12 months in reference to a financial metric used to evaluate a company's performance, such as revenues or debt to equity (D/E). Although a 12-month period is a relatively short time span for examining a given equity evaluation measure, it is considered useful because of the fact that it indicates a company's most recent performance, and therefore may be indicative of the company's current trend. The terms "last twelve months" or "trailing twelve months" frequently appear in a company's earnings reports or other financial statements.
BREAKING DOWN 'Last Twelve Months - LTM'While in some respects, 12 months of data is less than adequate for investment evaluations, it is a long enough span of time to level out seasonal factors, possible short-term price fluctuations and market swings. Data from the last twelve months is often used to evaluate retail companies. Last twelve month figures are more current than annual financial statement figures and avoid potentially misleading short-term measures, such as quarterly figures.
In reviewing figures shown as last twelve months or trailing twelve months, investors should not confuse the figures as necessarily coinciding with a company's most recent fiscal year. In company financial statements, last twelve month figures refer to the 12-month period ending on the last date of the month the financial statement is dated. For example, in a financial statement dated March 2015, last twelve month figures cover the period of time from April 1, 2014 through March 31, 2015.
Calculating Last Twelve Months Data
An investor or analyst can manually calculate last twelve month figures by using a company's 10-K and 10-Q SEC filings. The calculation is done by adding the year-to-date (YTD) figure to the company's most recent fiscal year figure, and then subtracting from that total the figure for the prior year to date, which can be found in the 10-Q filing.
Using Last Twelve Months Metrics
In addition to being used to gauge the recent trend of a given company's performance, last twelve month financial metrics are also frequently used to compare the relative performance of similar companies within an industry or sector. Financial metrics commonly considered by looking at last twelve month figures include a company's price-earnings (P/E) ratio and earnings per share (EPS). In reviewing stocks, mutual funds and exchange-traded funds (ETFs), the dividend yield figure for the last twelve months is often compared with the SEC yield figure, which reflects only the yield of the most recently paid dividend.
Another instance where the last twelve months' figures are useful is when a company is being considered for acquisition. To arrive at a more accurate current value of a company, last twelve months’ figures are often preferable to the most recent fiscal year figures.