A wide gap has emerged in the liquidity positions of companies listed on the Nigerian Exchange Limited (NGX), with 22 of 40 firms analyzed holding less cash than their outstanding debt as of the second quarter of 2026.
The companies recorded combined debt of N3.9 trillion, according to data obtained by Vanguard, highlighting varying levels of exposure to refinancing, interest costs and liquidity pressures across the listed market.
The analysis showed that 18 of the 40 companies had cash-to-debt ratios of at least 1.0 times, meaning their cash holdings were equal to or higher than their total debt. The remaining 22 companies recorded ratios below 1.0 times, indicating that their outstanding debt exceeded available cash.
The cash-to-debt ratio provides an indication of a company’s ability to cover its total debt with cash and cash equivalents. However, analysts caution that it is not a standalone measure of financial strength because companies also rely on operating cash flows, credit facilities and other sources of liquidity to meet their obligations.
Companies With Strong Cash Cover
HBM Nigeria recorded the highest cash-to-debt ratio among the companies analyzed at 319.07 times, based on N393.68 billion in cash against total debt of N1.23 billion.
UPDC Real Estate Investment Trust followed with a ratio of 283.73 times, holding N7.15 billion in cash against N25.2 million in debt.
eTranzact International posted a ratio of 214.89 times, with N23.69 billion in cash compared with N110.24 million in debt, while CWG recorded 211.1 times, based on N7.4 billion cash and N35.06 million debt.
Other companies with substantial cash coverage included Unilever Nigeria at 44.8 times, Berger Paints at 18.4 times, Industrial and Medical Gases at 13.56 times and NASCON Allied Industries at 12.72 times.
Several other companies also had cash positions above their debt. Vitafoam Nigeria recorded 5.88 times, UPDC 5.47 times, International Breweries 3.34 times, Sterling Financial Holdings 3.08 times and May & Baker Nigeria 2.83 times.
Livestock Feeds posted 1.94 times, followed by Julius Berger Nigeria at 1.85 times, Chams Holdings at 1.65 times, Dangote Cement at 1.31 times and Skyway Aviation at 1.19 times.
These figures indicate stronger cash coverage relative to debt, although they do not necessarily translate into higher profitability or better overall financial performance.
22 Companies Record Debt Above Cash
At the other end of the scale, Aradel Holdings recorded a cash-to-debt ratio of 0.96 times, with N1.77 trillion in cash against N1.84 trillion in total debt.
Ellah Lakes followed at 0.81 times, while John Holt recorded 0.77 times, Academy Press 0.72 times and Eterna 0.69 times.
ABC Transport had a ratio of 0.58 times, while Cadbury Nigeria and Fidson each recorded 0.53 times.
The ratio fell to 0.46 times for BUA Cement and 0.44 times for BUA Foods. Beta Glass recorded 0.34 times, Conoil 0.20 times, while Guinness Nigeria and Champion Breweries each stood at 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, FTN Cocoa Processors 0.08 times and C & I Leasing 0.07 times.
Chellarams posted 0.05 times, while Caverton Offshore Support Group had the lowest ratio at 0.03 times.
Caverton’s N2.46 billion cash position, for example, represented only a small portion of its N87.15 billion total debt. Chellarams had N235.16 million in cash against N5.12 billion in debt.
Low Ratio Does Not Automatically Mean Distress
Analysts said companies with cash-to-debt ratios below 1.0 times should not automatically be considered financially distressed.
Businesses can generate cash through normal operations, maintain undrawn credit lines and hold other liquid assets that are not reflected in a simple cash-to-debt comparison.
However, a persistently low ratio could increase refinancing and interest-rate risks, particularly when significant debt repayments fall due before sufficient operating cash is generated.
Companies with stronger cash positions, meanwhile, have greater flexibility to repay debt, fund working capital, finance expansion or absorb temporary disruptions in revenue.
Analysts also cautioned that exceptionally high cash balances should be examined because holding large amounts of idle cash may raise questions about capital allocation and whether funds could be deployed more productively.
Debt Can Support Growth or Increase Risk
Ambrose Omordion, Chief Operating Officer of InvestData Consulting Limited, said investors should assess debt alongside earnings, operating cash flow, interest coverage and the maturity profile of borrowings.
He noted that debt can increase shareholder returns when borrowed funds are deployed in profitable projects, but can also magnify losses when earnings and cash flows deteriorate.
The same principle applies to cash-to-debt ratios. A company with a low ratio but strong and predictable operating cash flow may remain financially stable, while a company with substantial cash but weak operations could still face longer-term challenges.
Implications for Investors
For shareholders, the figures offer an additional indicator of financial risk but should not be used as the sole basis for investment decisions.
Investors need to consider profitability, operating cash flow, finance costs, debt maturities, working-capital requirements, asset quality and management’s approach to capital allocation.
Companies with substantial cash reserves can potentially reduce borrowing costs by paying down debt or finance investment without immediately seeking new loans or issuing additional equity.
Economic and communications expert Clifford Egbomeade said investors should also examine the quality and availability of reported cash before drawing conclusions about a company’s liquidity.
He noted that some cash may be committed to inventories, capital expenditure, acquisitions, dividends or other strategic obligations. Cash and cash equivalents may also include restricted funds or short-term investments that cannot be deployed immediately.
Wider Economic Impact
The liquidity position of major listed companies has broader implications for Nigeria’s economy because corporate financial health can influence investment, employment, production, tax revenues and activity in the capital market.
Companies carrying substantial debt may have to dedicate more of their earnings to interest and principal repayments, potentially limiting the funds available for expansion, technology, hiring and shareholder distributions.
At the same time, debt can help companies expand productive capacity when it is deployed efficiently and supported by sustainable cash flows.
The latest figures therefore point to significant differences in borrowing and liquidity strategies across NGX-listed companies, with some maintaining cash buffers several times larger than their debt while others rely more heavily on operating income and external financing to meet their obligations.
