An economic moat is a competitive advantage that permits a company to earn a return on its capital above its cost of capital for long periods of time.  Excess return on capital and revenue growth build long-term business value. Companies that exhibit such attributes are generally viewed as high-quality companies.

Capital allocation is the process of determining the most efficient investment strategy for a company’s financial resources with the goal of maximizing shareholder value. This is widely considered one of the most important functions of a company’s management team.