How to Answer “What’s the difference between LTM and NTM, and when would you use each?” in Investment Banking Interviews

Start with crisp definitions, then immediately connect them to how multiples are quoted.

• LTM (Last Twelve Months): trailing 12 months of actual results (e.g., revenue, EBITDA, EPS) based on reported financials. It answers: what just happened?
• NTM (Next Twelve Months): forward 12 months of expected results, typically based on consensus estimates, management guidance, or your model. It answers: what’s expected to happen next?

Then make it concrete: EV/LTM EBITDA uses trailing EBITDA in the denominator; EV/NTM EBITDA uses forward EBITDA. Same enterprise value, different earnings window.

One sentence of intuition: LTM is more objective and auditable; NTM is more forward-looking and often better reflects current run-rate, but depends on forecast quality.

Give rule-of-thumb use cases, framed around comparability and representativeness—this is what interviewers mean by “when would you use each?”

Use LTM when:

• You want a clean, verifiable baseline and estimates are limited or inconsistent.
• The business is relatively stable and the trailing period is representative.
• You’re comparing names with uneven research coverage, making forward numbers less comparable.

Use NTM when:

• The market is pricing the business on near-term expectations (common in live trading comps).
• Trailing results are not representative due to growth, a recent downturn/recovery, pricing resets, or operational changes.
• There’s been a major event (acquisition, restructuring) and you need a better view of “normalised” near-term earnings.

Anchor the takeaway for valuation metrics in interviews: the best choice is the one that makes peers most comparable and best reflects sustainable earnings power.

Show you can actually build the numbers, not just define them—this matters in financial modeling interview prep.

• Rolling LTM (typical build): last fiscal year + latest interim period − prior-year comparable interim period (to avoid double counting). This creates a trailing 12-month window as of the latest quarter.
• NTM construction: ideally a true next-12-month window using consensus quarterly (or monthly) estimates rolled forward from the valuation date. If only annual numbers are available, be explicit whether you’re using FY1 as a proxy (and that FY1 ≠ NTM except near fiscal year-end).
• Consistency checks:
  1. EV and the financial metric should be as-of the same date,
  2. apply the same normalisations (one-offs, run-rate cost saves, pro forma acquisition effects) across the entire comp set.

Close by stating you’d often look at both LTM and NTM, but you’ll justify which one you anchor on for the specific situation.

Pick one simple example that explains why EV/LTM and EV/NTM can diverge.

• High-growth company: If EBITDA is ramping quickly, EV/LTM EBITDA can look artificially high because the denominator reflects a smaller historical earnings base. EV/NTM EBITDA may be more representative of near-term earning power and how investors are pricing the growth.

• Cyclical/peak earnings: If the last twelve months captured peak margins or commodity pricing, LTM may overstate sustainable earnings. NTM (based on downcycle forecasts) will usually produce a higher multiple, which can be a more realistic view of through-cycle valuation.

Wrap with an interview-ready line: you choose LTM vs NTM based on which best represents sustainable run-rate and keeps the peer set comparable.