Why Capital Light Businesses are Superior…

[ATC (Absolute Total Compound)]

Academic Concept on Capital Intensity

= Inverse of Asset Turnover

= Asset ÷ Revenue

.

But I don't buy the concept, neither does Munger and Buffet.

.

Instead,

.

My definition of:

.

Capital Financing Pressure

= Inverse of the Synergized Moat

= Inverse of (Asset Turnover Ratio × Gross Profit Margins × Net Profit Yield from Gross Profit)

= Inverse of (Asset Turnover Ratio × Gross Profit Margins × Net Profit Yield from Gross Profit)

= Inverse of (Rev/Total Assets × GP/Rev × NP/GP)

= Inverse of (GPA × NP/GP)

= Inverse of (NP/Total Assets)

= Inverse of ROA

Minimum MoAT (structure competitive advantage) as suggested by Pat Dorsey

= 7% ROA

Thus,

Capital Financing Pressure Heavy

> 1/0.07

> 14.2857142857