Since Moodle is said to be open sourced, can i edit and modify moodle code to build my own LMS instead of starting from scratch?

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Yes, you can start to build your own LMS from scratch but it need skilled moodle developers and time so i will suggest you to go for the companies who are doing moodle customization like

1. Paradiso Solutions
2. White House
3. Perception

It will help you to save your time & money