Last Twelve Months (LTM) Financials

What are Last Twelve Months (LTM) Financials?

Last Twelve Months is a calculation that combines the most recent quarterly and semi-annual financial data with the previous year’s annual report to provide a comprehensive picture of a company’s performance over the last twelve months. LTM can also be known as Trailing or Rolling Twelve Months data.

This approach ensures that analysts have access to the most current information from a company rather than relying on historical data from the fiscal year-end. This is particularly important when conducting ratio or trading comparables analysis and valuations.

Download the Last Twelve Months (LTM) Financials Template in the free resources section.

Steps for Using the LTM Financials Template

• Download the free LTM Financials Template
• Replace the example numbers in the blue font color cells with your own figures from your company’s financial statements, including data from the annual report (10-K) and the latest quarterly report (10-Q)
• If quarterly data is not available it is possible to take semi-annual revenue figures and either select 50% as a quarter, or if more seasonal, make an estimate or best guess given the data available to derive a quarterly figure
• Add or remove line items as needed for your specific analysis by selecting the row, right-clicking, and choosing Insert or Delete
• Verify that the formulas in the black font color cells correctly capture all line items, including any new ones you’ve added
• Input the relevant financial data for the periods required, such as Sales, Operating Expenses, Depreciation and Amortization, and Tax Expense
• The template will automatically calculate key metrics like Operating Profit, EBIT, EBITDA, and Net Income for each period
• Follow the guidance in the template to subtract the appropriate prior period figures and add the current period figures to arrive at the Last Twelve Months (LTM) calculations
• Review the LTM EBIT, LTM EBITDA, and other LTM figures, which represent the most up-to-date data available for the trailing twelve months
• Utilize these LTM figures in your financial analysis, valuations, or trading comparables, ensuring you have the most accurate and current information

What is Last Twelve Months (LTM)?

Last Twelve Months (LTM) calculations help analysts to produce rolling yearly financial statements. LTM preparation involves using the latest available company figures by taking information from the 10K and the latest 10Q reports (or other recent reports) to create rolling 12-month data.

For trading comparables analysis, taking the most recent 12-month data available provides better visibility on current performance than relying on annually reported figures. The historic (or trailing) value driver should be the latest available.

If we were calculating EV/EBIT for a company in October 2020, with a fiscal year end of 31st December 2019, we need to find the most recent data available. This could be taken from the quarterly reported figures for Q1, Q2 & Q3 2020. Using the data from these quarterly statements, you can create a LTM Income Statement and derive an LTM EBIT.

LTM trading multiples are valuable when comparing companies with different fiscal year-ends as it creates a set time frame to then analyze performance. This can be particularly useful if there have been recent changes in the sector landscape and investors are looking to see how a company is performing. It’s also useful for cyclical businesses to capture the same time-period of peaks and troughs for analysis.

LTM Explained

The LTM calculation process can be better understood with an example.

LTM Example 1

Based on the following company data, calculate the last 12-months figures including 1Q 2020.

The data above is a section of the income statement. The LTM figures can be calculated using the following formula:

• 12 months data from the latest Annual Report (10K) Year 2
• (Less) 3 months prior period data from the prior period’s quarterly report (10-Q)
• (Add) 3 months current period data from the latest quarterly report (10-Q)

The example requires subtracting the figures of 1Q Year 1 from the full-year data of FY Year 2 and adding the information for 1Q Year 2.

Based on the formula above, here is the LTM data:

LTM Example 2

Based on the below given, we can calculate LTM EBIT and EBITDA for this company for 12 months ending 30-Jun-51. First, we need to calculate the EBIT and EBITDA for the respective periods. EBIT is the operating profit of the company, so to calculate EBITDA, we add depreciation and amortization to the EBIT.

Next, we can calculate LTM EBIT & EBITDA by removing the 6 months of information we do not need and adding the latest 6 months of data.

LTM Multiples

Once LTM Financials are calculated they can be used in metrics and multiples to assess a company’s performance relative to the previous 12-months and also to peers. The most commonly used metrics are Price/Earnings ratio (using LTM earnings per share) along with dividend yield, EV/EBIT and EV/EBITDA. LTM metrics can also form the basis for comparison to NTM forecast multiples and ratios. They are valuable analytical tools as they include the current economic climate and any recent events that may impact company performance. Typically, investors look at LTM and NTM multiples very closely and analyse them before making an investment decision.

Conclusion

LTM data allows for up-to-date analysis of company performance during the most recent time-period as opposed to relying on historic annual reports. By taking the most recent 12-month period, companies can be compared over the same time frame across a sector, despite having different fiscal-year ends or reporting seasons. This is particularly useful when looking at trading multiples as it can capture a fixed 12-month period of most recent reported data.

It also allows analysts to look at financial performance in light of recent economic or regulatory events. LTM data is also extremely useful when looking at seasonal or cyclical peaks and troughs in a timely fashion. It will also assist an analyst in determining whether a company is on track to meet its annual forecast guidance.

Trailing or LTM figures can also form the basis for detailed forecasts and can be refined and compared to ensure all the relevant up-to-date information is included in analyst’s models and valuations.

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