A significant disparity has emerged in the ability of companies listed on the Nigerian Exchange to cover their debt with cash holdings, according to data compiled by Vanguard newspaper.
The data, covering 40 companies in the second quarter of 2026, showed that the firms had a combined total debt of N3.9tn.
Of the 40 companies, 18 recorded cash-to-debt ratios of at least 1.0 times, indicating that their cash holdings matched or exceeded their total debt. The remaining 22 companies had ratios below 1.0 times, meaning their total debt was higher than their cash holdings.
Companies with strongest cash cover
Huaxin Building Material also known as HBM Nigeria recorded the highest cash-to-debt ratio at 319.07 times, with N393.68bn in cash against N1.23bn in debt.
It was followed by UACN Property Development Company (UPDC) Real Estate Investment Trust at 283.73 times, eTranzact International at 214.89 times and Computer Warehouse Group (CWG) at 211.1 times.
Other companies with relatively high cash coverage included Unilever Nigeria at 44.8 times, Berger Paints at 18.4 times, Industrial & Medical Gases at 13.56 times and National Salt Company of Nigeria popularly known as NASCON Allied Industries at 12.72 times.
Vitafoam Nigeria recorded a ratio of 5.88 times, followed by International Breweries at 3.34 times, Dangote Cement at 1.31 times and Skyway Aviation at 1.19 times.
Debt exceeds cash in 22 companies
At the other end of the table, Aradel Holdings recorded a cash-to-debt ratio of 0.96 times, with N1.77tn in cash against N1.84tn in debt.
John Holt recorded 0.77 times, while Cadbury Nigeria and Fidson each recorded 0.53 times. BUA Cement had a ratio of 0.46 times, Conoil 0.20 times and Guinness Nigeria 0.16 times.
The lowest ratios were recorded by Chellarams at 0.05 times and Caverton Offshore Support Group at 0.03 times.
Caverton had N2.46bn in cash against total debt of N87.15bn.
Analysts caution against reading ratio in isolation
Analysts cautioned that the cash-to-debt ratio alone does not provide a complete picture of a company’s financial strength or its ability to service debt.
A high ratio could indicate that a company is holding substantial cash that could otherwise be used to fund expansion or returned to shareholders. Conversely, a low ratio does not necessarily indicate financial distress, as companies may have strong operating cash flows or access to credit facilities.
The Chief Operating Officer of InvestData Consulting, Ambrose Omordion, said debt should be assessed alongside earnings, cash flow, and interest-cover ratios.
He noted that debt could magnify both gains and losses depending on how it is deployed.
Economic and communications expert Clifford Egbomeade said investors should also consider the composition of a company’s cash holdings, noting that some funds could be restricted or earmarked for specific commitments.
According to him, companies with substantial cash and low debt have greater flexibility to respond to economic shocks, finance expansion and pursue investment opportunities without immediately relying on borrowing.
Analysts also noted that the broader implication for the Nigerian economy goes beyond the amount of debt held by companies to how that debt is used.
They said financially stable listed companies are better positioned to sustain investment, employment, and production.
Credit: Vanguard
