FINANCIAL TERMS
Annuity
Financial product that pays a steady stream of regular payments, often to provide income during retirement
Cash Flow
Actual cash a company generates from its core, day-to-day business, calculated to show real cash collected rather than paper profit
Competitive Moat
Sustainable competitive advantage that protects a business from being challenged by others in its industry
Consumer Advantage
When a company beats competitors based on the benefits its product delivers, not on cost
Distribution Advantage
When a company can get its product to customers more cheaply than its competitors
Duopoly
A market dominated by two companies
EBITDA (Earnings before interest, taxes, depreciation, and amortization)
Measure of a company's profit from its core operations, calculated before subtracting several major costs (borrowing, taxes, and the gradual accounting cost of its assets)
Monopoly
A market dominated by one company
Production Advantage
Competitive advantage that allows a company to reduce how much it costs to deliver the products they sell to their customers
Purchasing Advantage
Production Advantage where a company decreases how much it costs them to buy products from suppliers
Profit (Net Income)
Money left after all expenses
Revenue
Money a company brings in from selling its products or services before any expenses are subtracted
Resource Uniqueness Advantage
Competitive advantage that exists when a company offers favorable or exclusive access to an essential material or service
Switching Cost Advantage
Competitive advantage that exists when a company’s customers face a real cost to switch to a competitor