HBM Nigeria, UPDC REIT and eTranzact record substantial cash surpluses, while Caverton, Chellarams and C&I Leasing emerge among companies with the lowest cash-to-debt ratios.
A fresh analysis of 40 companies listed on the Nigerian Exchange Limited (NGX) has revealed a significant disparity in their ability to meet debt obligations with available cash, with 22 firms holding less cash than their total outstanding debt.
The data, covering the second quarter of 2026 and obtained by Vanguard, showed that the companies had a combined debt burden of N3.9 trillion, highlighting the contrasting liquidity positions of businesses operating across different sectors of the Nigerian economy.
While 18 companies recorded cash-to-debt ratios of at least 1.0 times, indicating that their available cash was equal to or higher than their total debt, the remaining 22 had ratios below that threshold.
The figures have drawn attention to the importance of liquidity management, particularly amid significant corporate borrowing costs and concerns about the capacity of businesses to sustain operations, finance expansion and meet their financial obligations.
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HBM Nigeria, UPDC REIT lead cash coverage
HBM Nigeria emerged with the highest cash-to-debt ratio among the companies examined, recording an impressive 319.07 times, based on cash holdings of N393.68 billion against total debt of N1.23 billion.
It was followed by UPDC Real Estate Investment Trust, which recorded a ratio of 283.73 times, with N7.15 billion in cash compared with debt of just N25.2 million.
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eTranzact International also posted a substantial cash-to-debt ratio of 214.89 times, supported by N23.69 billion in cash and N110.24 million in total debt.
CWG recorded 211.1 times, with cash holdings of N7.4 billion against debt of N35.06 million.
Other companies with considerable cash coverage included Unilever Nigeria, with a ratio of 44.8 times; Berger Paints, 18.4 times; Industrial and Medical Gases, 13.56 times; and NASCON Allied Industries, 12.72 times.
The figures indicate that these businesses have cash holdings significantly above their reported debt levels, although the ratios alone do not establish their overall profitability or financial strength.
Several major firms maintain cash above debt
The analysis also identified a number of established companies whose cash holdings exceeded their total debt, providing them with a degree of liquidity protection.
Vitafoam Nigeria recorded a cash-to-debt ratio of 5.88 times, while UPDC posted 5.47 times. International Breweries followed with 3.34 times, Sterling Financial Holdings recorded 3.08 times, and May & Baker Nigeria had 2.83 times.
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Livestock Feeds posted a ratio of 1.94 times, followed by Julius Berger Nigeria at 1.85 times, Chams Holdings at 1.65 times and Dangote Cement at 1.31 times. Skyway Aviation recorded 1.19 times.
These figures suggest that the companies have cash buffers relative to their debt obligations, which may provide flexibility in meeting financial commitments and responding to temporary disruptions in revenue.
However, analysts caution that a high ratio should not automatically be interpreted as evidence of superior management or stronger business performance. Companies holding substantial cash may also need to demonstrate that the funds are being deployed effectively to support growth and generate returns.
Aradel, BUA Cement among firms with debt exceeding cash
At the other end of the spectrum, several companies recorded cash-to-debt ratios below 1.0 times, indicating that their reported debt exceeded their available cash.
Aradel Holdings recorded a ratio of 0.96 times, with N1.77 trillion in cash against total debt of N1.84 trillion.
Ellah Lakes posted 0.81 times, John Holt recorded 0.77 times, Academy Press had 0.72 times and Eterna recorded 0.69 times. ABC Transport posted 0.58 times, while Cadbury Nigeria and Fidson each recorded 0.53 times.
The ratio was lower among BUA Cement, at 0.46 times; BUA Foods, 0.44 times; Beta Glass, 0.34 times; Conoil, 0.20 times; Guinness Nigeria, 0.16 times; and Champion Breweries, also 0.16 times.
DAAR Communications recorded 0.14 times, while Cutix and Japaul Gold & Ventures each posted 0.11 times.
Geregu Power recorded 0.09 times, followed by FTN Cocoa Processors at 0.08 times, C&I Leasing at 0.07 times and Chellarams at 0.05 times.
Caverton Offshore Support Group recorded the lowest ratio among the companies examined, at 0.03 times, with cash of N2.46 billion against total debt of N87.15 billion. Chellarams had N235.16 million in cash compared with debt of N5.12 billion.
A low cash-to-debt ratio does not necessarily mean that a company is experiencing financial distress. Businesses may generate sufficient operating cash flow to meet their obligations or have access to undrawn credit facilities and other sources of liquidity.
Nevertheless, persistently low cash coverage can expose companies to refinancing and interest-rate risks, particularly when substantial repayments fall due before sufficient operating cash is generated.
Analysts warn against relying on cash-to-debt ratios alone
Market analysts have said the cash-to-debt ratio provides investors with an important indication of liquidity pressure, particularly in an environment where corporate borrowing remains expensive.
Companies with ratios substantially above 1.0 times generally have larger cash buffers relative to their debt, potentially enabling them to fund working capital, meet repayment obligations and withstand temporary revenue disruptions.
However, excessive cash holdings may also raise questions about whether management is allocating capital productively rather than investing in expansion, reducing debt or returning funds to shareholders.
Ambrose Omordion, Chief Operating Officer of InvestData Consulting Limited, said investors should not assess corporate debt in isolation but should also examine earnings, operating cash flow, interest-cover ratios and the maturity profile of borrowings.
He noted that borrowing could magnify shareholder returns when funds are invested in profitable projects but could also magnify losses when earnings and cash flows weaken.
Omordion added that a company with a low cash-to-debt ratio could remain financially stable if it had strong and predictable operating cash flow, while a company with a high ratio but weak operations could still encounter longer-term difficulties if its cash balance was not replenished.
Economic and communications expert Clifford Egbomeade also stressed the need to look beyond the headline ratios and examine the quality and utilisation of corporate cash.
According to Egbomeade, companies with substantial cash and low debt have greater flexibility to respond to economic shocks, finance expansion and take advantage of investment opportunities without immediately resorting to expensive borrowing.
He also noted that some companies deliberately retain cash to finance inventories, capital expenditure, acquisitions, dividend payments and other strategic commitments.
Egbomeade cautioned that cash and cash equivalents may include restricted funds or short-term investments that cannot necessarily be deployed immediately, making it important for shareholders to examine the composition of a company’s cash holdings.
Implications for shareholders and the Nigerian economy
The contrasting liquidity positions of the companies could have implications for shareholders, particularly regarding financial risk, future returns and the ability of businesses to sustain operations during difficult economic conditions.
Companies with relatively strong cash positions may have greater flexibility to service debt, maintain operations and finance expansion without immediately resorting to additional borrowing or issuing new equity.
Conversely, companies with low cash coverage could face increased financial pressure if earnings or operating cash flows weaken, especially where large debt repayments are approaching.
Analysts have therefore advised investors to consider profitability, operating cash flow, interest expenses, debt maturity profiles, working-capital requirements, asset quality and management’s capital-allocation strategy alongside cash-to-debt ratios.
At the broader economic level, the liquidity positions of listed companies could influence investment, employment, production and capital-market development.
Businesses carrying heavy debt burdens may have to allocate a larger proportion of their earnings to interest and principal repayments, potentially limiting the funds available for expansion, technology, employment and dividend payments.
However, analysts noted that debt can also support economic growth when it is used productively to expand operations and increase productive capacity.
The analysis underscores the importance of distinguishing between the amount of debt a company carries and how effectively it uses borrowed funds.
Ultimately, the cash-to-debt ratio remains one component of a broader financial-health assessment. A company with relatively low cash coverage but predictable operating cash flows may be capable of managing its obligations, while a company with substantial cash holdings may still face operational challenges.
The second-quarter figures provide an additional indicator for investors assessing the financial positions of NGX-listed companies, but analysts emphasize that a complete evaluation requires a closer examination of each company’s financial statements, operating performance and future obligations.
