How to Answer an LTM vs NTM Multiples Interview Question

A step-by-step framework for explaining why a company's trailing and forward EV/EBITDA multiples diverge, with a worked example and the follow-up interviewers expect.

"Why is this company's LTM multiple so much higher than its NTM multiple?" is a question that trips up a lot of candidates — not because the math is hard, but because it's easy to answer with the calculation and forget the interpretation the interviewer is actually testing for.

Step 1: State What Each Multiple Divides By

Before touching any numbers, show the interviewer you know the definitions:

LTM EV/EBITDA = Enterprise Value ÷ trailing twelve months' actual EBITDA
NTM EV/EBITDA = Enterprise Value ÷ next twelve months' estimated EBITDA (usually consensus)

Since Enterprise Value is the same in both, any gap between the two multiples comes entirely from how much EBITDA is expected to grow over the coming year.

Step 2: Walk Through a Worked Example

Say a target trades at an Enterprise Value of $2,400m, with LTM EBITDA of $120m and NTM EBITDA of $160m:

LTM EV/EBITDA = $2,400m / $120m = 20.0x
NTM EV/EBITDA = $2,400m / $160m = 15.0x

Against a peer group trading at a 12.0x LTM median and an 11.5x NTM median, the target's premium falls from about 67% on a trailing basis to about 30% (0.304) on a forward basis. The full step-by-step version of this calculation, including the peer premium math, is worked through in our LTM vs. NTM Multiples case study.

Step 3: Give the Interpretation, Not Just the Numbers

This is the part most candidates skip. The correct interview answer isn't just "the NTM multiple is lower" — it's explaining why: the market is pricing in expected earnings growth, so a name that looks expensive relative to peers on a trailing basis can look much more reasonable once that growth is accounted for. State this explicitly. An interviewer wants to hear that you understand the multiple gap as a proxy for the market's growth expectations, not just as an arithmetic quirk.

Step 4: Anticipate the Follow-Up

A strong candidate volunteers the natural next question before being asked: what if the NTM estimate is wrong? Since NTM EBITDA usually comes from sell-side consensus (sometimes management guidance, which tends to run more optimistic), the multiple is only as reliable as the forecast behind it. Flagging this — and noting that a defensible comps analysis should show both LTM and NTM multiples side by side rather than relying on just one — is what separates a mechanical answer from one that shows real judgment.

Where This Fits Into a Broader Comps Analysis

LTM vs. NTM is one input into a much larger comparable company analysis, which also involves peer selection and scrubbing peer financials for one-off items — covered in depth in our Comparable Company Analysis case and our complete guide to relative valuation. If you also want a refresher on interpreting a single multiple in isolation, see our guide on how to answer what an EV/EBITDA multiple actually means in an interview setting.