LTM stands for last twelve months or trailing twelve months. LTM revenue is frequently used by finance professionals to measure a company's financial performance because it averages out the effects of seasonality, occasional events, and any factors that would skew a periodic data point. Analysts use LTM figures for several reasons:
- LTM looks at the most recent business performance which reflects a company's current trend.
- LTM avoids short-term measurements that are uncommon for the business.
- LTM figures can be used to compare similar companies in an industry.
- LTM provides a relevant calculation of valuation metrics such as the P/E ratio.