cash conversion cycle - Ceta Research

Growth of $1 invested in Low CCC vs High CCC vs S&P 500 on US stocks from 2000 to 2025.

cash conversion cycle

Cash Conversion Cycle Doesn't Work as a Stock Signal (US Backtest, 2000-2025)

We tested CCC as a stock-picking signal on US equities over 25 years. Low-CCC companies returned 4.6% CAGR vs 7.3% for SPY. The spread between low and high CCC was -0.6%. An honest result that builds more credibility than another claimed 15% alpha.

Growth of 1 invested in Low CCC vs High CCC Indian stocks from 2000 to 2025, compared to Sensex.

cash conversion cycle

Cash Conversion Cycle on Indian Stocks: Positive Spread, Trails Local Market

We backtested CCC on Indian equities from 2000 to 2025. Low-CCC companies returned 8.6% CAGR vs 7.3% for high CCC, a +1.3% spread. Weak signal dominated by IT services sector bias. Sharpe of 0.085 and -57.3% drawdown make it impractical as a standalone strategy.

Growth of $1 invested in Low CCC vs High CCC Canadian stocks from 2000 to 2025, compared to TSX Composite.

cash conversion cycle

Cash Conversion Cycle on Canadian Stocks: +3.4% Spread, +3.7% vs TSX Composite

CCC produced the best spread of any developed market on the TSX. Low-CCC companies returned 7.1% CAGR vs 3.9% for high CCC, a +3.2% spread. Best Sharpe (0.210) and lowest drawdown (-36.5%) of any CCC portfolio tested. The resource-heavy TSX creates real working capital differentiation.

cash conversion cycle

Cash Conversion Cycle Tested on 14 Global Exchanges: 9 Positive vs Local Benchmarks

We ran the same CCC backtest across 13 global exchanges. Five showed positive spreads, six negative. Unlike Altman Z-Score, there's no clean geographic pattern. CCC is a sector proxy, not a quality signal. Hong Kong +5.8%, Canada +3.2%, Korea -6.3%. Full comparison with methodology.