Last Twelve Months (LTM)

What Is Last Twelve Months (LTM)?

Last twelve months (LTM) refers to the timeframe of the immediately preceding 12 months. It is additionally generally designated as trailing twelve months (TTM). LTM is often used in reference to a financial metric used to evaluate a company's performance, like revenues or debt to equity (D/E). Albeit a year period is a relatively short time span for examining company performance, it is considered useful because it indicates a company's latest performance, and is indicative of the company's current state. The terms "last twelve months" or "trailing twelve months" frequently appear in a company's earnings reports or other financial statements.

Understanding 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 annual seasonal factors, possible short-term price variances, and some market swings. Last year figures provide updated metrics from the typical annual and quarterly figures reported by company management.

In reviewing figures displayed as last twelve months or trailing twelve months, investors should not assume the figures necessarily coincide with a company's latest fiscal year. In company financial statements, which are typically filed at the company's fiscal year-end, the last year figures refer to the year period ending on the last date of the month the financial statement is dated, for example, June 30 or December 31. For example, in a financial statement dated March 2015, last year figures cover the period of time from April 1, 2014, through March 31, 2015.

Utilizing the Last Twelve Months Metrics

In addition to being used to gauge the recent trend of a given company's performance, the last year financial metrics are likewise frequently used to compare the relative performance of comparative companies inside an industry or sector. Financial metrics regularly considered by taking a gander at last year 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 throughout the previous twelve months is often compared with the SEC yield figure, which reflects just 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 latest fiscal year figures.