Labs

Make the periods comparable

A full year and a half year are not interchangeable.

Live experiment

Make the periods comparable

Last twelve months550

Prior full-year revenue$500

1001000

Prior-year first six months$220

0500

Current-year first six months$270

0600

Before you move a sliderHow do you build last-twelve-month revenue without counting the latest six months twice?

LTM = 500 − 220 + 270 = 550

Prior full year

500

Remove the old first half

-220

Add the new first half

270

Last twelve months

550

Read the mechanism

This swaps an old six months for a new six months. Adding the new half to the full year would give eighteen months. Doubling the half year assumes no seasonality, which is a different estimate.

Model assumptions and units

Same business, currency, accounting basis and units. LTM equals the prior full year, minus the old comparable half year, plus the new half year. Acquisitions, currency, restatements and seasonality are not adjusted here.

Make the periods comparable

Make the periods comparable

Learn the thinking behind it