What is the difference between LTM and TTM EBITDA?

None. Last twelve months and trailing twelve months are two names for the same figure: earnings before interest, tax, depreciation and amortisation over the year that ends on a chosen date. LTM is more common in lending and acquisition documents, TTM in equity research and market data. Either way, the figure is a record of earnings already made, not a forecast.

How do you calculate LTM EBITDA from quarterly figures?

Add the four most recent quarters. If quarterly figures are not available, take the last full financial year, add the year to date, and subtract the same months of the previous year. Both methods give the same result as long as the periods match and the figures are on the same accounting basis. Where the business has bought or sold a subsidiary during the twelve months, the agreement usually says how to adjust for it.

What is the difference between LTM and NTM EBITDA?

LTM looks back over the twelve months just ended; NTM looks forward over the next twelve and is a forecast. Valuers often use NTM for businesses growing quickly, because the past year undersells them. In corporate lending, maintenance covenants are usually tested on LTM because it can be checked against accounts; lenders use forecasts to judge where LTM is heading rather than to replace it.

Why do banks use LTM rather than the last financial year?

Because the financial year goes out of date. By the third quarter, the last full year can be up to nine months old, and a business whose trading has turned would still be tested on its better period. LTM brings the test up to date each quarter while still covering a full year, so seasonal swings cancel out and the covenant reads the business as it stands now.

// WORKED EXAMPLETHE ARITHMETIC A DECISION RESTS ON

LTM EBITDA: a Worked Example

Each quarter, the year gains a quarter and loses one.

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-07

// THE SHORT ANSWER

A leverage or interest cover covenant tested every quarter needs a full year of earnings each time; otherwise a seasonal business would pass in its busy quarters and fail in its quiet ones. LTM EBITDA supplies that year: the twelve months ending on the test date, rolled forward one quarter at a time. Each roll adds the newest quarter and drops the same quarter of the year before, so the figure moves by the difference between the two. That is why a lender reads the quarter that left as closely as the one that arrived.

BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// WORK THE SUM

Every Groundwork file that is a number to work out — cash conversion, debt service cover, expected loss, risk-weighted assets, the margin on a bank's own book — with the working shown in the senior read. One minute each, no signup.

Open The Number →

// 01 — WHY A COVENANT READS TWELVE MONTHS

Debt is measured on a day; earnings are earned over a period. To compare the two, a covenant needs a period long enough to hold every season of the business once. A single quarter would make a garden supplier look heavily geared in winter and lightly geared in spring, with nothing changed but the weather. The financial year holds every season but is out of date for most of the year it is used in.

The last twelve months solve both problems. Facility agreements commonly define the test period as the twelve months ending on each quarter date, so the year being tested is complete and ends on the test date itself. Trailing twelve months, or TTM, is the same figure under another name.

// 02 — HOW THE FIGURE IS BUILT

LTM = last full financial year

+ current year to date

− the same months of the previous year

or, with quarterly figures:

LTM = the four most recent quarters added together

Both routes give the same answer if the pieces match: the year-to-date and its comparative must cover the same months, on the same accounting policies. Listed companies reporting under the international interim standard publish year-to-date figures with comparatives for the same period of the year before, which is why the first route works from public accounts. A mid-market borrower usually supplies monthly or quarterly management accounts, and the lender builds LTM from those.

Three adjustments recur. An acquisition or disposal during the twelve months is usually dealt with by including or removing that business's earnings for the full period, which is pro forma EBITDA. A facility agreement that freezes the accounting basis requires each quarter to be restated to it. And because management accounts are unaudited, the lender checks the LTM it was given against the audited accounts once they are signed.

// 03 — THE EXAMPLE

A garden products wholesaler, constructed for this page like every figure in it, has a financial year to 30 June and most of its earnings in the October to December quarter. Last year's quarterly EBITDA was US$2.0m, US$4.5m, US$1.5m and US$1.0m, a year of US$9.0m. This year's first three quarters are US$1.8m, US$3.6m and US$1.4m. Net debt is held at US$27m to keep the example simple.

LTM to 31 March = 9.0 + (1.8 + 3.6 + 1.4) − (2.0 + 4.5 + 1.5)

= 9.0 + 6.8 − 8.0 = 7.8

Check, four quarters: 1.0 + 1.8 + 3.6 + 1.4 = 7.8

Test date Roll LTM Leverage

30 June financial year 9.0 27 ÷ 9.0 = 3.00×

30 Sept 9.0 − 2.0 + 1.8 8.8 27 ÷ 8.8 = 3.07×

31 Dec 8.8 − 4.5 + 3.6 7.9 27 ÷ 7.9 = 3.42×

31 March 7.9 − 1.5 + 1.4 7.8 27 ÷ 7.8 = 3.46×

One quarter × 4, March: 27 ÷ (1.4 × 4) = 27 ÷ 5.6 = 4.82×

One quarter × 4, Dec: 27 ÷ (3.6 × 4) = 27 ÷ 14.4 = 1.88×

Most of the deterioration arrived in one roll. In December the wholesaler replaced a US$4.5m quarter with a US$3.6m one, and leverage rose by more than a third of a turn. The quarters either side were close to the year before. The last two lines show why a covenant does not annualise a single quarter: the same business would read 4.82 times in March and 1.88 times in December. These levels are the example's, not a market norm.

// 04 — HOW IT DIFFERS FROM THE FIGURES BESIDE IT

LTM is a record. The financial year is the same kind of record, fixed once a year. The next twelve months, NTM, is a forecast, used in valuation and in a lender's own projections but seldom the basis of a corporate maintenance covenant, though project finance and some property facilities test cover on projected figures. Run-rate EBITDA annualises a recent change as if it had been in place all year, and pro forma EBITDA adds or removes businesses bought or sold. Each starts from LTM and moves away from what was earned.

A lender reading a compliance certificate therefore asks two questions. Is this LTM, or LTM with adjustments? And if adjustments, which ones, and does the agreement allow them? The answer explains most of the gap between the covenant figure and the accounts.

DEFINED IN ONE PARAGRAPH → · RUN-RATE EBITDA → · THE TEST DATE →

// 05 — WHERE IT DECIDES A FILE

LTM is the reason a covenant can be breached in a quarter that was perfectly good. If the quarter that dropped out was exceptional, the LTM falls even though the latest quarter beat budget. A lender who tracks the roll can see a breach coming two or three quarters out, by setting each forecast quarter against the one it will replace, and can raise it with the borrower while there is still time for a waiver, a reset or an equity cure.

The second place it decides a file is the year-end. Audit adjustments land in the final quarter, so a business that tested comfortably on management accounts can find its LTM restated when the audited accounts arrive. A lender reconciles the two, and a borrower near the line does well to raise known adjustments before the certificate goes in rather than after.

THE MONTHLY PACK → · LOAN COVENANTS, EXPLAINED →

// SOURCES

The documents the statements on this page rest on. Each was opened and checked when cited.

Australian Accounting Standards Board, AASB 134 Interim Financial Reporting (compiled, applicable from 1 January 2022), the Australian text of IAS 34 — paragraphs 20 and 21 — Requires interim statements for the year to date with comparatives for the same period of the preceding year, the pieces the LTM formula uses, and encourages highly seasonal businesses to report the latest twelve months — section 02.

// QUESTIONS PEOPLE ASK

What is the difference between LTM and TTM EBITDA?: None. Last twelve months and trailing twelve months are two names for the same figure: earnings before interest, tax, depreciation and amortisation over the year that ends on a chosen date. LTM is more common in lending and acquisition documents, TTM in equity research and market data. Either way, the figure is a record of earnings already made, not a forecast.
How do you calculate LTM EBITDA from quarterly figures?: Add the four most recent quarters. If quarterly figures are not available, take the last full financial year, add the year to date, and subtract the same months of the previous year. Both methods give the same result as long as the periods match and the figures are on the same accounting basis. Where the business has bought or sold a subsidiary during the twelve months, the agreement usually says how to adjust for it.
What is the difference between LTM and NTM EBITDA?: LTM looks back over the twelve months just ended; NTM looks forward over the next twelve and is a forecast. Valuers often use NTM for businesses growing quickly, because the past year undersells them. In corporate lending, maintenance covenants are usually tested on LTM because it can be checked against accounts; lenders use forecasts to judge where LTM is heading rather than to replace it.
Why do banks use LTM rather than the last financial year?: Because the financial year goes out of date. By the third quarter, the last full year can be up to nine months old, and a business whose trading has turned would still be tested on its better period. LTM brings the test up to date each quarter while still covering a full year, so seasonal swings cancel out and the covenant reads the business as it stands now.

THE IN-TRAY · ONE MINUTE

Make the call on one file.

A short file on the ground this page covers. Every option opens with how far it sits from a senior banker’s read.

THE CALL · THE LOAN · CAPACITY

A US$35m loan was sized on EBITDA of US$10m. Halfway through the year, management cuts its forecast to US$7m.

What changes?

5 MORE ON THE LOAN · CAPACITY →WHERE DO YOU READ FROM? THE PLACEMENT →

THE GLOSSARYIN ONE PARAGRAPHLTM EBITDA (last twelve months) What is LTM EBITDA, and why do covenants test on it?