LTM (Last Twelve Months)

The build is one line: last full fiscal year, plus the year-to-date interim period just reported, less the same interim period from the prior year. A company with a 31 December year end that has just reported the nine months to September gives LTM = FY plus 9M this year less 9M last year. Every figure comes from filings the company has published, so nothing in an LTM is an estimate.

It exists because a fiscal year end is an accident of history and a valuation is not. Four months after year end, the last reported annual figure is sixteen months stale at its oldest point. LTM refreshes the denominator every time the company reports, which is why it is the standard basis for a leveraged finance quote, a credit agreement covenant test and most transaction multiples.

LTM and calendarisation solve different problems and are routinely confused. LTM answers "how recent is this number" and moves the window forward in time for one company. Calendarisation answers "are these companies on the same clock" and aligns several companies to a common year end. A comps page can need both: LTM to make the trailing column current, calendarisation to make the forward column comparable.

The two also differ in what they are built from. LTM is arithmetic on reported figures and is exact. Calendarisation blends two fiscal years by a month weight and is therefore an approximation, because the weight assumes trading is spread evenly across the year. That difference in precision is the reason a practitioner reaches for LTM whenever the reported periods allow it, and calendarises only when they do not.

The refinement most candidates have never met: where quarterly data exists, a calendar period can be assembled largely from quarters rather than weighted from annual figures. Add the whole reporting quarters that fall inside the target year and weight only the part-quarters at each end. Because fiscal quarters rarely align with calendar quarters, this does not make the figure exact, but it confines the even-month assumption to two or three months instead of applying it across all twelve. On a business with a genuine trading peak that is worth a couple of per cent, which is a fraction of a turn on the multiple and enough to matter in a tight comps range.