# Moat

*Corporate Finance & M&A — Finicade finance glossary*

A moat is a structural advantage that lets a company earn returns above its cost of capital for years without competition eroding them. The durable sources are few: network effects, switching costs, cost advantages from scale, intangible assets like brands and licences, and efficient scale in small markets. Everything else — a good product, a talented team — is competed away, which is why moat analysis dominates terminal value assumptions.

**Also known as:** economic moat, competitive advantage, durable advantage

**Related terms:** [Return on Invested Capital](https://finicade.com/glossary/return-on-invested-capital), [Economies of Scale](https://finicade.com/glossary/economies-of-scale), [Value Investing](https://finicade.com/glossary/value-investing), [Terminal Value](https://finicade.com/glossary/terminal-value), [Economic Value Added](https://finicade.com/glossary/economic-value-added)

Source: https://finicade.com/glossary/moat