Last Twelve Months (LTM Finance)

By
rjonesx
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What does ‘Last Twelve Months – LTM’ mean

The term “last twelve months” (LTM), which is sometimes known as “trailing twelve months” (TTM), refers to the time period of the immediately previous 12 months in relation to a financial indicator used to assess a company’s performance, such as sales or debt to equity (D/E).

However, although though a 12-month period is a very small length of time to examine a specific equity assessment metric, it is regarded valuable since it reflects a company’s most recent performance, which may be indicative of the company’s present trend, and hence is deemed relevant. Earnings reports or other financial statements from a corporation commonly include the phrases “the previous twelve months” or “the last twelve months and a half.”

Explaining ‘Last Twelve Months – LTM’

While 12 months of data is less than suitable for investment assessments in certain ways, it is a long enough period of time to smooth out seasonal variables, probable short-term price variations, and market swings, among other things. When evaluating retail organizations, it is common to utilize data from the previous twelve months. Data from the previous twelve months are more recent than figures from the yearly financial statement, and they exclude potentially deceptive short-term indicators, such as quarterly figures.

Calculating Last Twelve Months Data

A company’s 10-K and 10-Q SEC filings may be used to manually generate data for the previous twelve months, which can be useful for investors and analysts. Adding the year-to-date (YTD) amount to the company’s most recent fiscal year figure and subtracting from that total the figure for the preceding fiscal year to date, which can be found in the 10-Q filing, is how the computation is completed.

Using Last Twelve Months Metrics

In addition to being used to measure the current trend of a certain company’s performance, financial indicators over the last twelve months are widely used to compare the relative performance of comparable firms within an industry or sector, according to the Financial Metrics Institute. The price-earnings (P/E) ratio and earnings per share of a corporation are two financial measures that are typically analyzed when looking at the previous twelve months’ numbers (EPS).

When evaluating stocks, mutual funds, and exchange-traded funds (ETFs), the dividend yield for the most recent twelve months is often contrasted with the yield reported by the Securities and Exchange Commission (SEC), which represents just the yield from the most recently paid dividend.

Last Twelve Months FAQ

What is a trailing 12-month report?

The trailing 12 months (TTM) is a phrase used to represent the performance data collected by a firm over the previous 12 consecutive months, which is then utilized to publish financial results. The 12-month period under consideration does not always correspond to the conclusion of a fiscal year.

What does rolling 12 months mean?

The rolling 12-month sum is the total money earned over the previous 12 months. As the 12-month period 'rolls' ahead one month at a time, the amount from the previous month is added, and the amount from one year ago is deducted from the total. As a consequence, a 12-month total has been carried forward to the beginning of the current month.

Does last 12 months include current month?

The term 'last twelve months' (LTM) refers to the period of time immediately preceding the 12 months in question. It is recognized that a 12-month period is an insufficient amount of time to examine corporate performance, yet it is seen as valuable since it represents a company's most recent performance and is indicative of the company's current situation.

Further Reading

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