And how to analyze a moat 🧠
Good 101 breakdown. But moats aren’t static — regulators, tech shifts, or new competitors can tear them down quick. That’s the part investors miss.
The Buffett-Munger Profitability_And_Assets_Productivity_Investing Truism Dharma 168:
CompROA Ratio and FPR
i.
CompROA Ratio (Competitive Return On Asset Ratio, by ATC)
= ∛(Revenue × Gross Profit × Net Profit) ÷ Total Assets
FPR (Finance Pressure Ratio, by ATC)
= Total Assets ÷ ∛(Revenue × Gross Profit × Net Profit)
= Inverse of CompROA
= 1 ÷ CompROA
ii.
If CompROA Ratio ≤ 0.2109 or FPR ≥ 4.743
= It implies Weak Competitive Advantage with Weak Profitability & High Finance Pressure
= Not a Compounder
iii.
If CompROA Ratio ≥ 0.4217 or FPR ≤ 2.371
= It implies Strong Competitive Advantage with Strong Profitability & Low Finance Pressure
= Poised to be a Multi-bagger Compounder, the magnitude depends on the synergy between the ROIC & Gnp
= Having a long compounding runway time horizon
Reference:
Profitability_And_Assets_Productivity_Investing Truism Dharma 162
The question remains if these can outperform over the next decade… people recognize value, and this is usually already priced in.
Good 101 breakdown. But moats aren’t static — regulators, tech shifts, or new competitors can tear them down quick. That’s the part investors miss.
The Buffett-Munger Profitability_And_Assets_Productivity_Investing Truism Dharma 168:
CompROA Ratio and FPR
i.
CompROA Ratio (Competitive Return On Asset Ratio, by ATC)
= ∛(Revenue × Gross Profit × Net Profit) ÷ Total Assets
FPR (Finance Pressure Ratio, by ATC)
= Total Assets ÷ ∛(Revenue × Gross Profit × Net Profit)
= Inverse of CompROA
= 1 ÷ CompROA
ii.
If CompROA Ratio ≤ 0.2109 or FPR ≥ 4.743
= It implies Weak Competitive Advantage with Weak Profitability & High Finance Pressure
= Not a Compounder
iii.
If CompROA Ratio ≥ 0.4217 or FPR ≤ 2.371
= It implies Strong Competitive Advantage with Strong Profitability & Low Finance Pressure
= Poised to be a Multi-bagger Compounder, the magnitude depends on the synergy between the ROIC & Gnp
= Having a long compounding runway time horizon
Reference:
Profitability_And_Assets_Productivity_Investing Truism Dharma 162
The question remains if these can outperform over the next decade… people recognize value, and this is usually already priced in.