working capital - Trading Studio

working capital

Working Capital Efficiency Across 14 Markets: Where It Works and Where It Fails

We tested working capital efficiency on 14 exchanges worldwide. 10 beat their local benchmark. Sweden: +6.51% vs OMX30. Canada: +5.99% vs TSX. US: +3.44% vs SPY. Benchmark choice matters more than we thought.

working capital

Working Capital Efficiency in Canada: 10.1% CAGR With the Lowest Drawdown We Tested

Canada produced the most defensive working capital efficiency portfolio across all 14 exchanges we tested. Max drawdown was -21.0% vs -28.80% for the TSX Composite. 10.05% CAGR beats the TSX by 5.99% per year.

working capital

Working Capital Efficiency in Sweden: 8.7% CAGR vs OMX30's 2.2% (+6.5%/yr Excess)

Sweden produced strong excess returns for working capital efficiency. 8.70% CAGR vs 2.19% for the OMX Stockholm 30. +6.51% annual excess and a 76% win rate. Best excess return across all exchanges tested.

working capital

Working Capital Efficiency in India: 15.2% CAGR Over 25 Years (+2.8%/yr vs Sensex)

India produced strong returns for working capital efficiency. Over 25 years, India's most capital-efficient companies returned 15.15% CAGR vs 12.32% for the Sensex. +2.82% annual excess and a 60% win rate against the local benchmark.

working capital

Working Capital Efficiency in the UK: 6.2% CAGR vs the FTSE 100's 1.1% Over 25 Years

The UK produced strong excess returns for working capital efficiency. 6.17% CAGR vs 1.13% for the FTSE 100. +5.04% annual excess and a 68% win rate over 25 years.

working capital

This Portfolio Absorbed Only 13% of Market Downturns Over 25 Years

We tested working capital efficiency as a stock selection signal across all US exchanges from 2000 to 2025. The result: 11.07% CAGR vs 7.64% for the S&P 500, with a down capture ratio of just 13%. The portfolio lost 13 cents for every dollar the market lost in downturns.

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.