Cash Conversion Cycle and Profitability: Evidence from Greek Service Firms

The present study examines the relationship between the cash conversion cycle (CCC) and profitability in major service sectors in Greece, including hotels, education, healthcare, transfer—rentals, and information technology. Using financial data from 343 public limited companies for the year 2023, the research applies descriptive statistics, Pearson correlation analysis, and ANOVA to evaluate how CCC components affect profitability, measured through return on assets (ROA). The results indicate that firms across all sectors maintain a negative CCC, suggesting efficient liquidity management, with the education sector exhibiting the most negative CCC due to upfront tuition payments. Additionally, the study finds a significant positive correlation between CCC and ROA, implying that firms with longer negative CCC values tend to achieve higher profitability. However, firm size, measured by total assets and sales, does not appear to influence CCC efficiency or profitability. These findings underscore the importance of industry-specific financial strategies and highlight the role of CCC optimization in enhancing financial performance. The study contributes to the literature on working capital management and provides practical implications for improving liquidity and profitability in service-oriented firms.