cash conversion cycle - Ceta Research

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 works on the TSX. Low-CCC companies returned 7.8% CAGR vs 4.4% for high CCC, a +3.4% spread. +3.7% excess over the TSX Composite. Sharpe 0.251 is the best of any CCC portfolio across 14 exchanges. The resource-heavy TSX creates real working capital differentiation.

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 5.9% CAGR vs 7.3% for SPY. The spread between low and high CCC was -0.2%. CCC barely works as a US stock-picking signal.

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

CCC backtested on NSE from 2000 to 2025. Low-CCC companies returned 7.8% CAGR vs 11.5% for the Sensex. +0.3% spread over high-CCC, but -3.7% vs the local benchmark. CCC doesn't beat the Indian market as a standalone strategy.

cash conversion cycle

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

We ran the same CCC backtest across 14 exchanges with local benchmarks. 9 of 14 show positive excess over local indices. Sweden +5.5% vs OMX, Canada +3.7% vs TSX, India -3.7% vs Sensex. Using local benchmarks vs SPY changes the picture significantly.