EBITDA vs. SDE

Note: This one is a quick hit for those that struggle with EBITDA vs. SDE. Owner’s compensation is the key. SDE- Is an acronym for Seller’s Discretionary Earnings, and is a metric for determining the historical cash flow of a business. It is a recasting process that starts with the net profit of a business, from either the business tax return or the year-end income statement.