Price & Market BehaviorExtended setlive in productionNew

cash conversion cycle spread

Updated quarterlyData needs: mediumlong onlyshort onlylong short

2019

Wang, B. (2019). The Cash Conversion Cycle Spread. Journal of Financial Economics, 133(2), 472-497.

In plain terms

Companies that turn inventory and bills into cash quickly tend to be quietly well-run, and the market often underrates them.

How it works

The cash conversion cycle (CCC = days inventory outstanding + days sales outstanding - days payables outstanding) has a negative relation with future returns: a low CCC reflects superior operational efficiency, lower working-capital financing, and faster reinvestment that the market underprices. The per-ticker version uses the firm's own trailing 12-quarter z-score of CCC to absorb the structural sector level (substituting for the paper's industry adjustment).

Live results

0 times picked on its own · 129 times inside a blend (128 beat the stock) · updated 2026-06-06

This strategy is a frequent ingredient in blends that combine a few strategies on one stock. It has contributed to 129 such blended picks (128 of which beat simply holding the stock). Picking it on its own is only one of the ways it shows up.

How its picks scored vs. buy & hold

Each pick is graded on a recent year it was never tuned on, against simply owning the same stock

Where its edge concentrates

Share of picks in each company-size group that beat buy & hold

How often it trades

Active vs. patient. Bars on the left mean it waits for rare setups; bars on the right mean it trades often

Return vs. buy & hold

How much each pick beat or trailed simply owning the stock over the test year (extreme microcap moves trimmed)

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Data dependencies

Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
Key metrics
A data feed this strategy reads, refreshed on its normal schedule.

Expected edge

Long low-CCC / short high-CCC earns roughly 0.4-0.6%/month after standard factor controls in the paper.

Related families

Accruals QualityPrice & Market Behavior

Earnings backed by cash flow are repeatable; earnings backed by accruals (paper changes in receivables/inventory) fade. Short high-accrual names.

Noa AnomalyPrice & Market Behavior

When a company's operating assets balloon faster than its lagged total assets, that bloat predicts underperformance. Inverse of the asset-quality story — we short the bloated names.

Cash ProfitabilityPrice & Market Behavior

Cash operating profit (backs out accrual fudges) over book equity is a sharper quality predictor than gross profit. Long the cash-rich.

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