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Last Twelve Months

The trailing twelve months of actual reported financial results as of a given analysis or transaction date, as opposed to a forward-looking projection. LTM EBITDA is the figure most commonly paired with precedent transaction multiples.

Practice questions using Last Twelve Months

Original questions written against the published FINRA and NASAA exam content outlines — not actual exam questions. Every choice is explained.

"LTM EBITDA," as commonly used in a precedent transaction multiple, refers to:

  1. A.The trailing twelve months of reported EBITDACorrect. LTM means "last twelve months" — trailing actual results.
  2. B.The next twelve months of projected EBITDAWrong. That describes NTM (next twelve months), a forward-looking figure, not LTM.
  3. C.The average EBITDA over the company's entire operating historyWrong. LTM is a specific trailing twelve-month window, not a full-history average.
  4. D.The EBITDA reported in the company's most recent single fiscal quarterWrong. LTM covers twelve months, not a single quarter.

Why: LTM stands for "last twelve months" — the trailing twelve months of actual reported EBITDA as of the transaction (or analysis) date, as opposed to a forward-looking projection.

A set of precedent transactions in fictional target Corvane Industries' sector averaged 10.5x LTM EBITDA. Corvane's own LTM EBITDA is $40 million. Applying the average precedent multiple, what is Corvane's implied enterprise value?

  1. A.$420 millionCorrect. 10.5x × $40M = $420 million.
  2. B.$40.5 millionWrong. This adds the multiple and EBITDA figures as if they were both dollar amounts.
  3. C.$3.81 millionWrong. This divides EBITDA by the multiple instead of multiplying.
  4. D.$450 millionWrong. This does not correctly multiply the given figures.

Why: Implied EV = precedent multiple × target LTM EBITDA = 10.5x × $40M = $420 million.

A precedent transaction set for fictional target Wexbury Media ranges from 7.0x to 9.0x LTM EBITDA, with Wexbury's own LTM EBITDA at $25 million. What is the implied enterprise value range?

  1. A.$200 million (a single point estimate)Wrong. This collapses the range to the midpoint at the average multiple rather than presenting the full range.
  2. B.$175 million to $225 millionCorrect. 7.0x × $25M = $175M and 9.0x × $25M = $225M.
  3. C.$32 million to $34 millionWrong. This divides EBITDA by the multiples instead of multiplying.
  4. D.$182 million to $234 millionWrong. These figures do not correctly apply the given multiples to the given EBITDA.

Why: Low end = 7.0x × $25M = $175M. High end = 9.0x × $25M = $225M. The implied EV range is $175 million to $225 million.

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