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Seller's Discretionary Earnings Formula

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Seller Discretionary Earnings measures the normalized, operating profitability of small to mid-sized businesses. Check FAQs

SDE = PTI + OS + NIE + D&A + DE + NRE

SDE - Seller Discretionary Earnings?PTI - Pre-Tax Income?OS - Owner's Salary?NIE - Net Interest Expenses?D&A - Depreciation and Amortization?DE - Discretionary Expenses?NRE - Non Recurring Expenses?

Seller's Discretionary Earnings Example

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Here is how the Seller's Discretionary Earnings equation looks like with Values.

Here is how the Seller's Discretionary Earnings equation looks like with Units.

Here is how the Seller's Discretionary Earnings equation looks like.

402760 = 235000 + 78000 + 4560 + 26500 + 36700 + 22000

402760 = 235000 + 78000 + 4560 + 26500 + 36700 + 22000

402760 = 235000 + 78000 + 4560 + 26500 + 36700 + 22000

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Seller's Discretionary Earnings Solution

Follow our step by step solution on how to calculate Seller's Discretionary Earnings?

FIRST Step Consider the formula

SDE = PTI + OS + NIE + D&A + DE + NRE

Next Step Substitute values of Variables

∴

SDE = 235000 + 78000 + 4560 + 26500 + 36700 + 22000

Next Step Prepare to Evaluate

∴

SDE = 235000 + 78000 + 4560 + 26500 + 36700 + 22000

LAST Step Evaluate

∴

SDE = 402760

Seller's Discretionary Earnings Formula Elements

Variables

Seller Discretionary Earnings

Seller Discretionary Earnings measures the normalized, operating profitability of small to mid-sized businesses.

Symbol: SDE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Seller Discretionary Earnings

Pre-Tax Income

Pre-Tax Income is the bottom-line profit of the business after deducting all operating expenses, taxes, and interest.

Symbol: PTI

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Pre-Tax Income

Owner's Salary

Owner's Salary is the compensation paid to the owners for their role in the business.

Symbol: OS

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Owner's Salary

Net Interest Expenses

Net Interest Expenses represents the interest paid on loans or other forms of debt.

Symbol: NIE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Net Interest Expenses

Depreciation and Amortization

Depreciation and Amortization are accounting methods used to allocate the cost of tangible and intangible assets over their useful lives.

Symbol: D&A

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Depreciation and Amortization

Discretionary Expenses

Discretionary Expenses refer to non-essential expenses that are not directly tied to the day-to-day operations of a business.

Symbol: DE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Discretionary Expenses

Non Recurring Expenses

Non Recurring Expenses are one-time or irregular expenses that are not expected to occur in the future or are not directly related to the core operations of the business.

Symbol: NRE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Non Recurring Expenses

Other formulas in Asset Management category

Go Amortization of Intangible Assets

AE = \frac{HCIA - RV}{ULA}

Go Net Capital Spending

NCS = ENFA - BNFA + Dep n

How to Evaluate Seller's Discretionary Earnings?

Seller's Discretionary Earnings evaluator uses Seller Discretionary Earnings = Pre-Tax Income+Owner's Salary+Net Interest Expenses+Depreciation and Amortization+Discretionary Expenses+Non Recurring Expenses to evaluate the Seller Discretionary Earnings, The Seller's Discretionary Earnings is a financial metric used to evaluate the earnings of a business by adding back non-operational or discretionary expenses to the net income. Seller Discretionary Earnings is denoted by SDE symbol.

How to evaluate Seller's Discretionary Earnings using this online evaluator? To use this online evaluator for Seller's Discretionary Earnings, enter Pre-Tax Income (PTI), Owner's Salary (OS), Net Interest Expenses (NIE), Depreciation and Amortization (D&A), Discretionary Expenses (DE) & Non Recurring Expenses (NRE) and hit the calculate button.

FAQs on Seller's Discretionary Earnings

What is the formula to find Seller's Discretionary Earnings?

The formula of Seller's Discretionary Earnings is expressed as Seller Discretionary Earnings = Pre-Tax Income+Owner's Salary+Net Interest Expenses+Depreciation and Amortization+Discretionary Expenses+Non Recurring Expenses. Here is an example- 402760 = 235000+78000+4560+26500+36700+22000.

How to calculate Seller's Discretionary Earnings?

With Pre-Tax Income (PTI), Owner's Salary (OS), Net Interest Expenses (NIE), Depreciation and Amortization (D&A), Discretionary Expenses (DE) & Non Recurring Expenses (NRE) we can find Seller's Discretionary Earnings using the formula - Seller Discretionary Earnings = Pre-Tax Income+Owner's Salary+Net Interest Expenses+Depreciation and Amortization+Discretionary Expenses+Non Recurring Expenses.

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Seller's Discretionary Earnings Formula

Seller's Discretionary Earnings Example

Seller's Discretionary Earnings Solution

Seller's Discretionary Earnings Formula Elements

Other formulas in Asset Management category

How to Evaluate Seller's Discretionary Earnings?

FAQs on Seller's Discretionary Earnings

Variable Name