Trailing vs forward multiples

Trailing multiples use historical earnings, often the latest twelve months. Forward multiples use earnings for a specified forecast period, such as the next twelve months or next fiscal year. State the valuation date and the exact denominator period.

Trailing vs forward multiples in round numbers

Hypothetical valuation at December 31, 2025, in US$ millions: enterprise value is 48. Actual earnings before interest, taxes, depreciation and amortization (EBITDA) for January–December 2025 is 6, while forecast EBITDA for January–December 2026 is 8. The trailing EV/EBITDA multiple is 48 ÷ 6 = 8.0x; the forward multiple is 48 ÷ 8 = 6.0x. The numerator is unchanged, and the lower forward multiple depends on growth that has not yet occurred.

Scroll horizontally to read all columns.

Hypothetical EV at December 31, 2025: US$48 million
Denominator periodEV/EBITDA
Jan–Dec 2025 actual: US$6m48 ÷ 6 = 8.0x
Jan–Dec 2026 forecast: US$8m48 ÷ 8 = 6.0x

Source: CFA Institute: market-based valuation and trailing versus forward multiples.

Multiple · EBITDA · Multiple consistency rule · Precedent transactions · All of the glossary