What Does Life to Date (LTD) Mean in Finance? Definition and Example
Life to Date Meaning
Life to Date, often abbreviated to LTD, is a metric that measures the financial performance from the beginning of a specific period up to the present date.
It provides an overall running total of a business’s finances, which can make it a useful measurement of the financial progress since inception.
Life to Date Example
The life to date calculation is very straightforward.
It simply involves summing the relevant values from the beginning of a specific period up to the current date.
For example, if a business that has been operating for five years and five months wanted to calculate its Life to Date (LTD) sales total for revenue, they would simply add up all of the revenue generated since the business’s inception:
Period | Revenue |
Year 1 | £50,000 |
Year 2 | £80,000 |
Year 3 | £110,000 |
Year 4 | £130,000 |
Year 5 | £150,000 |
Month 1 | £10,000 |
Month 2 | £20,000 |
Month 3 | £25,000 |
Month 4 | £15,000 |
Month 5 | £20,000 |
LTD Total | £610,000 |
Importance of Using Life to Date in Finance
So, what does life to date mean to a business, and why would they use it?
Comprehensive Performance Monitoring
Using life to date financial measurement provides a comprehensive view of business performance from its inception to the present.
This allows businesses to assess their overall growth, profitability and financial health over the long term, rather than focusing on short-term fluctuations.
Balance Sheet Systems
When looking at finance totals in an accounting system, the user is often presented with the option to view data from the period, year to date (YTD) and life to date (LTD).
Using the life to date option is important when looking at balance sheet accounts as this will be the cumulative total over the company’s entire history.
This offers a true reflection of the businesses balance sheet, which is a “snapshot” of a company’s financial position at a specific point in time.