Trailing Twelve Months (TTM)

Trailing twelve months (TTM) is a measurement window covering the most recent twelve consecutive months of financial results, ending at the most recently closed month rather than being tied to the fiscal year end, so that a valuation reflects how the business is performing now instead of how it looked at the last year close. Brokers build a TTM figure by taking the last full fiscal year, adding the current year-to-date period, and subtracting the same year-to-date period from the prior year.

Also called LTM, Last twelve months, T12, Rolling twelve months · Last updated 2026-08-07 · All 24 terms

How to build a TTM figure

TTM is arithmetic on statements a broker already has, not a separate report. The bridge is: last full fiscal year, plus current year to date, minus prior year to date for the same months. Because the window contains one of every calendar month, it is not distorted by which part of the season it happens to cover, though it does not correct for a genuine year-over-year change in the seasonal pattern itself.

Take an illustrative business closing its books monthly, measured through August 2026.

FY2025 revenue: $4,200,000
January through August 2026 revenue: $3,050,000
January through August 2025 revenue: $2,760,000
TTM revenue through August 2026: $4,200,000 + $3,050,000 − $2,760,000 = $4,490,000

Run the same bridge on earnings, not just revenue

The number that moves the price is recast earnings, so run the identical bridge there. If FY2025 seller's discretionary earnings was $780,000, year-to-date August 2026 SDE was $560,000, and year-to-date August 2025 SDE was $505,000, then TTM SDE is $835,000. At an illustrative 3.0x SDE multiple that is $2,505,000 against $2,340,000 on the last full year, a $165,000 swing produced entirely by which twelve months were chosen.

The trap is applying add-backs only to the fiscal year and pulling the two stub periods straight off the interim profit and loss. Every add-back in the bridge has to be measured in all three windows, or the growth on display is partly an artifact of an inconsistent recast rather than of the business. A buyer who finds one add-back present in the fiscal year and absent from the stubs will recalculate the whole schedule.

TTM, annualization, and a run rate are three different claims

Three numbers get called roughly the same thing in a data room and they are not interchangeable. A TTM figure is twelve months of actual results ending at the last closed month; it is history. An annualized figure scales a partial period up to a full year, eight months of results multiplied by 12/8, which assumes the remaining four months resemble the first eight and is therefore an estimate. A run rate extrapolates from a shorter window still, sometimes a single month or quarter.

Buyers accept TTM as history, treat annualization as an assumption to be tested, and discount a run rate heavily. Label whichever one a package uses, because a buyer who discovers an annualized figure presented as TTM will re-test every other number on the page.

Where TTM breaks down

A TTM figure inherits every weakness of the interim statements underneath it, and interim statements from a small business are usually the weakest financial records in the data room.

Basis mismatch. Cash-basis bookkeeping software interims bridged against an accrual tax return produce a number that belongs to neither basis. Confirm the basis of all three windows before doing the arithmetic.
Missing year-end entries. Depreciation, accrued payroll, inventory true-ups, and reclassified owner distributions are often booked once at year end and never monthly, which makes every stub period look more profitable than the year it sits in.
No prior-year interim. Without January through August of the prior year there is no bridge, and annualizing the current stub instead is a materially weaker claim.
Balance sheet items have no TTM. Total debt, the current ratio, and working capital are point-in-time measures. Where an average is genuinely needed, such as setting a working capital peg, practitioners typically use a twelve-month average of month-end balances, which is a separate calculation from TTM.
Single-month noise. One unusually large month entering or leaving the window moves the result. When TTM and the last fiscal year disagree by more than a few percent, the disagreement itself is the story a buyer needs explained.
Fiscal-year businesses. For a company on a June or September year end, TTM and the last fiscal year can be nearly the same window, and the exercise adds little.

How buyers and lenders actually use it

Buyers apply TTM asymmetrically and a broker should plan for it. When TTM earnings run above the last full year, buyers argue the stub is unaudited, unadjusted, and unproven, and they anchor to the fiscal year or to a weighted average of several years. When TTM runs below the last full year, the same buyers call it the run rate. The defense is documentation rather than argument: monthly statements on one consistent basis, the same add-backs applied to every window, and a stated operational reason for the change.

Lenders live on the recent window. Cash-flow lending, including SBA 7(a) change-of-ownership loans, is sized against recent earnings, and the long-standing SBA convention is that interim financial statements be dated within 180 days of the application, a requirement conventional cash-flow lenders generally mirror. A deal that goes quiet for a quarter comes back needing a refreshed stub and a recalculated debt service coverage ratio.

The TTM stub is also where a quality of earnings engagement concentrates its testing. A provider rebuilds the stub month by month, tests revenue and expense cutoff around the period boundary, and looks specifically for revenue pulled forward or discretionary spending deferred in the months closest to the sale. A confidential information memorandum that presents three fiscal years plus a TTM column is presenting the column that will receive the most scrutiny.

Where this shows up in CastBack

CastBack annualizes a partial current year straight-line at 12/N, where N is the month the period ends, applying the factor once upstream of every calculation, with a per-line override for seasonal or one-time items and a year-header toggle between the year-to-date and annualized views. Annualization is a different calculation from the TTM bridge described above. See how a recast is produced.