What Is LTM?
Last twelve months refers to financial metrics such as revenue, EBITDA, or net income measured over the twelve months ending on the latest reported date, rather than over a fiscal year. If a December fiscal-year company has reported through its March quarter, LTM covers April of the prior year through March of the current year, which is more current than the last annual filing.
Analysts favor LTM because it smooths seasonality by always spanning a full year while still reflecting the newest quarters. A retailer's holiday-heavy fourth quarter appears exactly once in any LTM window, so the figure stays comparable as the window rolls forward each quarter.
How to Calculate LTM Figures
The standard formula is: LTM = most recent full fiscal year + year-to-date stub period - prior-year stub period. Suppose a company earned $500 million of EBITDA in fiscal 2025, $130 million in the first quarter of fiscal 2026, and $110 million in the first quarter of fiscal 2025. LTM EBITDA equals $500 + $130 - $110 = $520 million. The stub data comes from 10-Q filings while the annual figure comes from the 10-K.
Balance sheet items are never calculated this way because they are point-in-time snapshots; analysts simply use the latest balance sheet. Deal teams also adjust LTM results for one-time items, acquisitions, and divestitures, producing a pro forma or adjusted LTM EBITDA that better represents run-rate earnings power.
Why LTM Matters in Deals and Valuation
LTM EBITDA is the denominator in the multiples that anchor most transactions: purchase prices are quoted as a multiple of LTM EBITDA, and leverage is negotiated as debt to LTM EBITDA, with credit agreements defining the term precisely. When a comps set mixes companies with different fiscal year ends, LTM figures put everyone on the same trailing basis without calendarization gymnastics.
The main limitation is that LTM looks backward. For businesses growing or shrinking quickly, trailing results misstate where the company is headed, which is why analysts pair LTM multiples with forward NTM multiples. Interviewers often ask candidates to compute an LTM figure from an annual number and two stub periods, so the formula is worth committing to memory.
