Frequently Asked Questions:

What is LTM?

Latest Twelve Months (LTM) is a term used to describe financial results during the period of the previous 12 months, also sometimes known as Trailing Twelve Month.

Why is it important?

Since the U.S. economy is more likely to experience a recession, and most companies and consumers have already been hit by the economic downturn in the last several? months. If you have data that compiles the last 12 months of the company’s performance you gain a better understanding of how the company’s financial ratios have been affected by these challenging economics scenarios.

What is the difference between LTM and Year-Over-Year (YoY)?

YoY is a term used to compare a time period (usually a month or quarter) against the same time period in the previous year. By contrast, LTM is the aggregate of the last 12 months. One of the advantages of year-over-year comparisons is that they mitigate the effect of seasonality.

From the FinListics Newsletter, Volume One, November 2008