What Does NTM Revenue Mean?
NTM revenue refers to a company's revenue over the next twelve months (NTM) of operations. This financial measure is sometimes overlooked by buyers who are more focused on a company's future profitability and ability to generate future EBITDA. However, it can be useful to determine if a company's top line is growing and where the revenue growth is coming from. The next twelve months should be reviewed by a buyer, particularly if there has been a catalyst during the period such as an acquisition or introduction of a new product.
Divestopedia Explains NTM Revenue
A company's NTM revenue will not provide information on its ability to turn a profit. If the company is capable of delivering $100 million of revenue over the next twelve months, but its margins are negative resulting in a net loss, then it is likely to face a valuation discount regardless of its top line generating abilities. This is why buyers focus more on NTM EBITDA when assessing the reasonability of a valuation, since the company's profitability is more important.
NTM revenue is more commonly the valuation of professional service firms such as accounting and legal practices where revenue accrues by the hour and is tied to the professionals themselves. This is because the cost structure can vary considerably and the majority of the revenue is tied to the individual professional's relationships with clients. If the professionals leave and take the clients with them, the revenue disappears completely making the valuation on NTM revenue more relevant.
FAQs
Next twelve months (NTM) refers to any financial measure such as revenue, EBITDA, or net income that is being forecasted for the immediate next twelve months from the current date.
What does NTM revenue mean? ›
The NTM (Next Twelve Months) is the next twelve months from the current date. Financial measures such as the net income, EBITDA, or revenue of the next twelve months predicted are the NTM.
What is the difference between NTM and LTM revenue? ›
Last Twelve Months (LTM) or Next Twelve Months (NTM) are two standard forms in which valuation multiples are presented in trading and transaction comps analyses. While LTM multiples are backward-looking and based on historical performance, NTM multiples are formulated from projected figures.
What does NTM mean in valuation? ›
NTM EV/EBITDA is a financial metric often used by buyers to assess the reasonability of a target's valuation. It is actually a combination of the following three terms: "NTM" — next twelve months; "EV" — enterprise value; and. "EBITDA" — earnings before income taxes, depreciation, and amortization.
What is the NTM price earnings ratio? ›
Definition of P/E Ratio (NTM)
The multiple of forecast earnings for the next twelve months that stock investors are willing to pay for one share of the firm.
What is the difference between NTM and FY 1? ›
I was informed that the difference between FY1 and NTM multiples is that FY1 multiples include potential acquisitions, divestitures or any other transaction along those lines whereas NTM multiples exclude these transactions.
What is the difference between NTM and STM? ›
NTM = next twelve months; STM = second twelve months (i.e. one year from now).
What is the difference between total market value and net worth? ›
Net worth is the book value (Assets - Liabilities). The market cap of a company is the value of all the company shares trading in the stock market. The market cap could be higher or lower than the book value. In most cases it is higher.
What is the discounted cash flow property value? ›
Discounted cash flow (DCF), a valuation method used to estimate the value of an investment based on its future cash flows, is often used in evaluating real estate investments. Initial cost, annual cost, estimated income, and holding period of a property are some of the variables used in a DCF analysis.
What is the acronym for market value? ›
MV stands for Market Value
This definition appears very frequently and is found in the following Acronym Finder categories: Business, finance, etc.
A higher EV/Revenue multiple suggests that the market has faith in the company's ability to generate revenue and is willing to pay more per dollar of sales. For investors, a lower multiple is preferred as it indicates that a company might be undervalued and could generate more profitable returns in the future.
What is a good price earnings ratio? ›
In simple terms, a good P/E ratio is lower than the average P/E ratio, which is between 20–25. When looking at the P/E ratio alone, the lower it is, the better.
What is a good price to earnings growth ratio? ›
What Is Considered to Be a Good PEG Ratio? In general, a good PEG ratio has a value lower than 1.0. PEG ratios greater than 1.0 are generally considered unfavorable, suggesting a stock is overvalued. Meanwhile, PEG ratios lower than 1.0 are considered better, indicating a stock is relatively undervalued.
What is net trade revenue? ›
Net Trading Revenue means gross trading revenue of the trading arm of the Licensee minus cost of goods sold by the trading arm of the Licensee.
What is the acronym for total revenue? ›
On an income statement, the acronym "TR" signifies "total revenue." A business's total revenue is the combination of all types of income that the business receives during an accounting period.
What is the abbreviation for net revenue? ›
NR stands for Net Revenue (finance)
Is total net revenue the same as sales? ›
Gross revenue is the amount of money a business brings in from sales in a given period, while net revenue is sales minus expenses. Gross revenue tells you how many sales your business is driving, while net revenue compares your income to your expenses.
