What is the past twelve months (LTM)?
The last twelve months (LTM) refer to the period of the previous 12 months. It is also commonly known as a twelve month flight (TTM). The LTM is often used in reference to a financial metric used to assess the performance of a business, such as income or debt on equity (D / E). Although a 12 month period is a relatively short period of time to review the performance of the business, it is considered useful as it indicates the most recent performance of a business and indicates the current state of the business. business. The terms “past twelve months” or “last twelve months” appear frequently in reports on the results of a business or in other financial statements.
Understanding the past twelve months (LTM)
In some ways, 12 months of data is less than enough for investment valuations, it’s a long enough time to mitigate annual seasonal factors, possible short-term price swings and some market swings. Figures for the past twelve months provide updated metrics from typical annual and quarterly figures released by company management.
When looking at the numbers shown as the past twelve months or the past twelve months, investors should not assume that the numbers necessarily coincide with a company’s last fiscal year. In the company’s financial statements, which are generally filed at the end of the company’s financial year, the last twelve months refer to the 12-month period ending on the last date of the month of the closing date of the statements. financial, such as June 30 or December 31. For example, in a financial statement dated March 2020, the figures for the last twelve months cover the period from April 1, 2020 to March 31, 2020.
Use of measurements from the last twelve months
In addition to being used to assess the recent trend in the performance of a given business, financial measures for the past 12 months are also frequently used to compare the relative performance of similar businesses within an industry or a sector. The financial measures commonly taken into account in the figures for the last twelve months include the price / earnings ratio (P / E) and the earnings per share (EPS) of a company.
When considering stocks, mutual funds, and exchange-traded funds (ETFs), the dividend yield rate for the past 12 months is often compared to the SEC yield rate, which only reflects the yield of the last dividend paid. Another example where figures from the past twelve months are useful is one where a business is being considered for an acquisition. To arrive at a more accurate present value of a company, the figures for the last twelve months are often preferable to the figures for the most recent financial year.