What is the See's Candies test?
The See's Candies test asks one question: for every $1 of profit a company added, how much capital did it have to add? Warren Buffett used See's Candies, which grew profit by about $77 million while needing roughly $32 million of extra capital, as the model of a great business. A company that needs little new capital to grow can hand most of its profit to owners.
What is the See's Candies test?
Buffett described See's in his shareholder letters as a business that kept growing earnings while needing very little new investment: a candy maker with a brand, not a factory empire. The test turns that into a ratio: capital added ÷ profit added over a long period.
This site uses the figures from his letter as the benchmark: about $32 million of capital for $77 million of added profit, or roughly $0.42 per $1 of new profit. FlightSafety, a training business that needed far more equipment, came to about $3.20, and a typical business in his example about $5.20.
How is it calculated here?
For each company the site averages operating profit at the start and end of a 10- or 15-year window, does the same for capital (operating working capital plus property and equipment, optionally goodwill), and divides the change in capital by the change in profit. A company whose profit grew while capital shrank needs no extra capital at all.
Lenders, REITs and other companies whose capital is not measured this way are excluded. See capital-light in the glossary and the methodology on Capital-Light Compounders.
Which companies pass the test today?
On October 16, 2026, 39 tracked companies had at least doubled profit over ten years with a return on capital of 25% or more. The three that needed no extra capital per $1 of new profit were Fortinet, Hilton and Automatic Data Processing; Trane, Caterpillar and Visa followed at $0.12 to $0.14 per $1.
| Company | Capital per $1 of new profit | Reading |
|---|---|---|
| See's Candies (Buffett's letter) | about $0.42 | The benchmark |
| Trane Technologies | about $0.12 | More capital-light than See's |
| FlightSafety (Buffett's letter) | about $3.20 | Capital hungry |
The live ranking is on the Capital-Light Compounders page, and every stock page shows the figure.
What does the test miss?
A low ratio over ten years can come from a one-off boom or a cyclical peak, so the site averages three years at each end. It also says nothing about price: a wonderful business can still be expensive, which is why the Compounders at a Fair Price page combines four lenses, including valuation.
See's Candies test FAQ
Is a low capital-to-profit ratio always good?
It is a sign of a business that does not need to reinvest much to grow, but check that profit growth is real: see earnings quality, not only the ratio.
Did Buffett invent this ratio?
He described the idea through See's Candies in his shareholder letters. The ratio form is this site's way of applying it, using the letter's own numbers as the yardstick.
Does the test work for banks?
No. A bank's balance sheet is its business, so capital added per profit added does not measure the same thing. Lenders and REITs are excluded here.