A fresh look at the financial positions of 40 companies listed on the Nigerian Exchange (NGX) has revealed a wide gap in how much cash businesses hold compared with their outstanding debt.
The analysis, covering the second quarter of 2026, showed that the companies had combined debt of about N3.9 trillion.
While 18 of the firms had enough cash to cover their total debt based on their cash-to-debt ratios, 22 companies had less cash than their outstanding borrowings.
The cash-to-debt ratio is one way of assessing a company’s liquidity position. A ratio above 1.0 means the company holds more cash than its total debt, while a figure below 1.0 indicates that debt is higher than available cash.
However, the ratio alone does not determine whether a company is financially healthy, as factors such as operating cash flow, profitability, interest costs and debt repayment schedules also matter.
Among the companies analysed, HBM Nigeria recorded the highest cash-to-debt ratio at 319.07 times, with N393.68 billion in cash compared with only N1.23 billion in total debt.
UPDC Real Estate Investment Trust followed with a ratio of 283.73 times, based on N7.15 billion in cash and N25.2 million in debt.
eTranzact International recorded 214.89 times, with N23.69 billion in cash against N110.24 million in debt, while CWG posted 211.1 times from N7.4 billion in cash and N35.06 million in debt.
Other companies with substantial cash cover included Unilever Nigeria at 44.8 times, Berger Paints at 18.4 times, Industrial & Medical Gases at 13.56 times and NASCON Allied Industries at 12.72 times.
Vitafoam Nigeria recorded a ratio of 5.88 times, while UPDC had 5.47 times. International Breweries stood 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 and Dangote Cement 1.31 times. Skyway Aviation had 1.19 times.
These figures indicate that, based purely on cash available compared with total debt, the companies had some degree of liquidity cover.
However, analysts caution that holding substantial cash does not automatically mean a company is more profitable or better managed.
22 companies have more debt than cash
At the other end of the table, 22 companies recorded cash-to-debt ratios below 1.0.
Aradel Holdings recorded 0.96 times, with N1.77 trillion in cash against N1.84 trillion in debt.
Ellah Lakes had 0.81 times, John Holt 0.77 times, Academy Press 0.72 times and Eterna 0.69 times.
ABC Transport recorded 0.58 times, while Cadbury Nigeria and Fidson Products each posted 0.53 times.
The ratio was lower for BUA Cement at 0.46 times, BUA Foods at 0.44 times and Beta Glass at 0.34 times.
Conoil recorded 0.20 times, while Guinness Nigeria and Champion Breweries each stood at 0.16 times.
DAAR Communications had 0.14 times, Cutix and Japaul Gold & Ventures each recorded 0.11 times, while Geregu Power stood at 0.09 times.
FTN Cocoa Processors recorded 0.08 times, C & I Leasing 0.07 times, Chellarams 0.05 times and Caverton Offshore Support Group had the lowest ratio at 0.03 times.
For example, Caverton had N2.46 billion in cash compared with N87.15 billion in total debt. Chellarams, meanwhile, held N235.16 million in cash against N5.12 billion in debt.
What the figures mean for businesses
Analysts said the figures provide investors with an indication of the liquidity pressure companies could face, particularly at a time when borrowing costs remain significant.
Companies with strong cash positions have greater flexibility to meet debt obligations, finance working capital and withstand temporary disruptions to revenue.
But analysts also warned that an unusually large cash balance can raise questions about whether the funds are being put to productive use.
Businesses may choose to hold cash for several reasons, including financing inventories, capital expenditure, acquisitions, dividend payments or future strategic investments.
Cash and cash equivalents may also include restricted funds or short-term investments that cannot immediately be used to settle obligations.
This means investors need to examine the composition and availability of a company’s cash rather than relying solely on the ratio.
For companies with ratios below 1.0, the situation does not automatically mean they are in financial distress.
Businesses can generate cash from their operations and may also have access to unused credit facilities or other sources of funding.
However, analysts said a persistently low cash-to-debt position could increase refinancing and interest-rate risks, especially when large debt repayments become due before sufficient operating cash is generated.
Impact on shareholders
The cash-to-debt position can also influence the level of financial risk faced by shareholders.
Companies with stronger liquidity may have more room to maintain operations during difficult periods, finance expansion and service debt without immediately seeking additional loans or issuing new shares.
Companies with weaker cash coverage, on the other hand, could face greater pressure if earnings or operating cash flow decline.
Analysts therefore advised investors to consider other financial indicators alongside cash and debt, including profitability, operating cash flow, interest coverage, debt maturity, working-capital requirements, asset quality and management’s capital-allocation strategy.
Ambrose Omordion, Chief Operating Officer of InvestData Consulting Limited, said investors should not examine debt in isolation.
He advised shareholders to consider earnings, cash flow, interest-cover ratios and the maturity profile of a company’s borrowings when assessing financial risk.
According to Omordion, debt can help increase shareholder returns when borrowed funds are invested in profitable projects, but it can also increase losses when earnings and cash flows weaken.
The same principle, he noted, applies to the cash-to-debt ratio.
A company with a low ratio but strong and predictable operating cash flow could remain financially stable, while a business with a high ratio but weak operations could still face challenges if its cash position is not being replenished.
Wider economic implications
The financial position of listed companies also has implications beyond individual shareholders.
Analysts said businesses carrying heavy debt burdens may have to devote more of their earnings to interest and principal repayments, potentially reducing the funds available for expansion, technology, employment and dividend payments.
However, debt can also support economic growth when it is used productively to expand operations and increase productive capacity.
Economic and communications expert Clifford Egbomeade said investors should look beyond the ratio itself and assess how companies manage and use their cash.
“The interpretation of cash and debt should go beyond the ratio itself,” Egbomeade said.
He explained that companies with substantial cash and relatively low debt have more flexibility to respond to economic shocks, finance expansion and pursue investment opportunities without immediately relying on expensive borrowing.
“This is particularly relevant in Nigeria where corporate borrowing costs remain relatively high,” he said.
Egbomeade added that companies could deliberately retain cash to finance inventories, capital expenditure, acquisitions, dividend payments and other strategic commitments.
He therefore urged investors to examine the quality and utilisation of cash before reaching conclusions about a company’s liquidity.
Overall, the data highlights the contrasting financial positions of companies on the NGX. While some businesses have cash balances several times higher than their debt, others have borrowings that significantly exceed the cash available to them.
The difference reflects varying approaches to borrowing, liquidity management and capital allocation, making cash-to-debt analysis one useful indicator for investors assessing corporate financial risk.
