An analysis of 40 companies listed on the Nigerian Exchange Limited, NGX, has shown significant differences in the amount of cash companies hold compared with their outstanding debt.
Data covering the second quarter of 2026 showed that the companies had combined debt of N3.9 trillion. Eighteen firms had cash/debt ratios of at least 1.0 times, meaning their cash holdings were equal to or greater than their total debt, while 22 companies had ratios below 1.0 times.
The cash/debt ratio provides an indication of how a company’s available cash compares with its total debt. However, the measure alone does not determine a company’s overall financial strength or its ability to service debt.
HBM Nigeria recorded the highest ratio at 319.07 times, based on N393.68 billion in cash and N1.23 billion in total debt. UPDC Real Estate Investment Trust followed at 283.73 times, with N7.15 billion in cash against N25.2 million in debt, while eTranzact International recorded 214.89 times, with N23.69 billion cash and N110.24 million debt.
CWG recorded 211.1 times, while Unilever Nigeria had 44.8 times, Berger Paints 18.4 times, Industrial & Medical Gases 13.56 times and NASCON Allied Industries 12.72 times.
Other companies whose cash exceeded their debt included Vitafoam Nigeria at 5.88 times, UPDC at 5.47 times, International Breweries at 3.34 times, Sterling Financial Holdings at 3.08 times and May & Baker Nigeria at 2.83 times. Livestock Feeds recorded 1.94 times, Julius Berger Nigeria 1.85 times, Chams Holdings 1.65 times, Dangote Cement 1.31 times and Skyway Aviation 1.19 times.
At the other end, Aradel Holdings recorded a ratio of 0.96 times, with N1.77 trillion cash against N1.84 trillion debt. Ellah Lakes stood at 0.81 times, John Holt at 0.77, Academy Press at 0.72 and Eterna at 0.69.
Other companies with ratios below 1.0 included ABC Transport at 0.58, Cadbury Nigeria and Fidson at 0.53 each, BUA Cement at 0.46, BUA Foods at 0.44, Beta Glass at 0.34, Conoil at 0.20, Guinness Nigeria and Champion Breweries at 0.16 each.
DAAR Communications recorded 0.14, Cutix and Japaul Gold & Ventures 0.11 each, Geregu Power 0.09, FTN Cocoa Processors 0.08, C & I Leasing 0.07, Chellarams 0.05 and Caverton Offshore Support Group 0.03 times.
Vanguard reported that Caverton had N2.46 billion in cash against N87.15 billion in debt, while Chellarams held N235.16 million cash against N5.12 billion in debt.
Market analysts said the figures can provide investors with an indication of liquidity pressure, particularly when borrowing costs are high. They also cautioned that neither a high nor low cash/debt ratio should be considered in isolation.
Ambrose Omordion, Chief Operating Officer of InvestData Consulting Limited, said investors should also examine earnings, operating cash flow, interest-cover ratios and the maturity profile of loans. He noted that debt can support expansion when invested productively but can also increase financial pressure when earnings and cash flows weaken.
Economic and communications expert Clifford Egbomeade similarly advised investors to examine the composition and intended use of cash rather than relying solely on the ratio. He noted that companies may retain cash for inventories, capital expenditure, acquisitions, dividends and other strategic needs.
Analysts said companies with substantial cash reserves may have more flexibility in meeting debt obligations and funding operations, while firms with low cash relative to debt could face greater refinancing and interest-rate pressures if operating cash flows weaken.
They stressed that investors should consider profitability, operating cash flow, interest expenses, debt maturity, working-capital requirements, asset quality and capital-allocation strategy alongside the cash/debt ratio.
At the broader economic level, analysts said companies’ liquidity positions can affect investment, production, employment, tax payments and capital-market development. They added that the quality and productive use of debt are also important when assessing a company’s financial position.
Source: VANGUARD
