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Trailing twelve months TTM
Also called TTM, LTM, last twelve months.
The most recent twelve consecutive months of results, used instead of a fiscal year so that underwriting sees current performance rather than a stale year-end.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
It is built by taking the last completed fiscal year and adding the current year-to-date while subtracting the same year-to-date period of the prior year. The result is a rolling annual figure that updates every month and captures a full seasonal cycle, which a partial-year view does not.
Underwriters use it for revenue, gross profit and cash flow on larger files, and use rolling deposit totals as the bank-statement equivalent on smaller ones. It is also the basis for most valuation multiples in acquisition financing, which is why an SBA acquisition file lives or dies on TTM earnings rather than last year's return.
The direction of travel inside the twelve months carries as much weight as the total. A business with flat TTM revenue where the last quarter is down thirty percent is not the same credit as one where the last quarter is up thirty percent, and any competent reviewer looks at the monthly series, not just the sum.
Where this one catches people
TTM is sometimes presented in a way that quietly excludes the worst months, or is combined with add-backs and "normalisations" that turn a trailing figure into a projection. On an acquisition file, adjusted TTM earnings is a negotiated number, and the lender's version will differ from the seller's. The gap between them determines how much of the purchase price is financeable.
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Trailing twelve months — common questions
What does trailing twelve months mean?
The most recent twelve consecutive months of results, used instead of a fiscal year so that underwriting sees current performance rather than a stale year-end.
Where does trailing twelve months catch people out?
TTM is sometimes presented in a way that quietly excludes the worst months, or is combined with add-backs and "normalisations" that turn a trailing figure into a projection. On an acquisition file, adjusted TTM earnings is a negotiated number, and the lender's version will differ from the seller's. The gap between them determines how much of the purchase price is financeable.
Is trailing twelve months the same as an interest rate?
Trailing twelve months is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does trailing twelve months apply to?
Term Loan, Business Line of Credit, SBA Loan, Asset-Based Lending.
Is there a worked example of trailing twelve months?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside trailing twelve months?
Debt service coverage ratio, EBITDA, Seasonality, Underwriting, Year-to-date.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.