Model Moat Fit
What Do We Mean When We Say “Better Than”?
What makes one company better than another? This is a fundamental question for investors. The answer, unfortunately, might not be one the financial community loves to hear - it depends.
Why is that? It’s because we first need to define what “better” means. For the purpose of this paper, we will focus on the core tenants of finance to rephrase the question What makes a company more valuable than another?
To answer this question, we will first define value as the amount of cash flows a company stands to generate. The natural next question then becomes, “How does one company generate cash flows better than another?”