Nigerian companies entered the final quarter of the year with a cash reserve of N2.3 trillion, the largest cash balance in recent history.
This data was compiled from over 30 of the largest companies listed on the Nigerian Exchange over the calendar year from January to December.
The data excludes commercial banks and insurance companies, whose business models allow them to receive cash on behalf of their customers.
The cash balances of the companies under consideration represent a 27% increase from the N1.8 trillion reported as cash and cash equivalents at the end of 2022. These companies reported total revenues of N8.05 trillion in the period under review.
The cash balances underscore the liquidity of Nigerian companies in a year fraught with macroeconomic challenges and subsequent monetary policy tightening.
Moreover, this year the economy recorded its highest money supply in history, surpassing N66 trillion by the end of September 2023.
Cash Pile Surge
Nigerian Companies and their cash balances as of September 2023
According to data from the 28 largest companies listed on the Nigerian Exchange (NGX), the total cash reserves at the end of the third quarter rose to N2.3 trillion from N1.8 trillion at the end of 2022.
On a year-on-year basis, the total cash balance was N1.3 trillion as of September 2022, compared to N1.8 trillion as of December 2021.
In terms of freshly generated cash, or cash flow from day-to-day operations, the companies accumulated revenues of N1.7 trillion by the third quarter of the year. Among the 30 companies reviewed, all but seven generated a positive operating cash flow.
A net positive cash flow generation suggests that the companies were able to convert their sales into cash, a sign that businesses are still managing to secure payment from customers for goods and services despite a weakening economy.
It also signifies that the cash collected from customers was sufficient to cover operating expenses.
Dangote Cement, Seplat, MTN, and Dangote Sugar topped the list of companies with the largest cash reserves.
Despite generating increased net cash from operations, some of the companies also relied on debt financing for their survival. As of the third quarter of the year, the total outstanding debt for the companies under review stood at N4.9 trillion, compared to N3.3 trillion at the end of 2022.
The total balance sheet size for the companies under review also rose from N13.8 trillion in 2022 to a significant N17.3 trillion in 2023, reflecting the impact of several macroeconomic factors on company assets, such as the depreciation of the naira.
Nigerian companies appear to have incurred more debt to support their operational and investment activities. Among the companies under review, only Cadbury, Unilever, CAP Plc, and GSK reported zero debt on their balance sheets.
In terms of loan balances, MTN, Dangote Cement, Seplat, and BUA Cement topped the chart with the largest debts, accounting for a total of about N2.9 trillion.
Regarding net cash flow from financing activities, which includes funds used to repay some loans and distribute dividends, the companies disbursed N482 billion.
The majority of this expenditure was dedicated to repaying shareholders through dividends.
What this means
As the final quarter of the year approaches, Nigerian companies are positioned in an unprecedented state of liquidity, with a robust cash reserve of N2.3 trillion.
This substantial financial buffer offers both companies and investors a solid ground amid the current macroeconomic challenges.
For investors, the increased cash reserves and the companies’ ability to turn sales into cash despite economic headwinds signal a potentially favorable climate for dividends and the prospect of resilient share performance.
Outlook for 2024
Looking ahead to 2024, these cash holdings could serve as a strategic war chest for companies, allowing them to navigate the uncertainties of a tightening monetary policy environment and to exploit growth opportunities without over-reliance on debt markets.
For companies, the decision between distributing cash to shareholders as dividends or reinvesting it into operations and growth initiatives will be critical.
This balance will determine not only their ability to sustain performance but also to capitalize on an eventual economic upturn.
Optics
The significant cash reserves provide a dual advantage: a shield against short-term macroeconomic turbulence and a springboard for long-term strategic investments.
Companies that judiciously manage these reserves, balancing shareholder returns with smart reinvestments, are likely to emerge as the frontrunners as the economy steadies and moves into a more stable phase in 2024.
Investors, on their part, will be watching closely, seeking to align with those entities that demonstrate both fiscal prudence and strategic acumen in the face of prevailing economic conditions.
스포츠 토토 배트맨
그는 북직예에서 가장 뛰어난 유학자로서 그의 제자와 옛 관리들이 천하를 누비고 있다.
스포츠 토토 베트맨
“알았어, 가서 일해도 돼.” 황태후는 무표정한 표정을 지었다.
슬롯 쿠폰
Li Chaowen은 여전히 매우 내성적인 것처럼 보였지만…
오션 슬롯
Hongzhi 황제는 고개를 끄덕이고 눈을 약간 가늘게 뜨고 계속 들었습니다.
꽁 머니 슬롯
Fang Jifan은 “폐하, 좀 드십시오. 사랑하는 제자는 어떻습니까?”
메이저 토토
따라서 고대에는 머리카락을 자르거나 얼굴을 찌르는 일종의 형벌이 있었습니다.
무료 메가 슬롯 머신
일반적으로 이러한 하인들은 대부분 성질이 급합니다.
꽁 머니 슬롯
Hongzhi 황제의 얼굴은 Ma Wensheng을 응시하며 끔찍하게 붉어졌습니다.
슬롯 머신
그런 다음 Zhu Houzhao는 일어나서 손을 흔들었습니다. “준비하세요.”
베트맨 사이트
기녀사원의 가장 큰 특징은 종종 다양한 활동이다.
피망 슬롯
이튿날 이른 아침, 홍치제는 무빈을 궁으로 불렀다.
슬롯 머신 종류
Wang Jinyuan은 한동안 Wei Zheng이되고 싶었 기 때문에 그를 설득하고 싶었습니다.
무료 슬롯 사이트
“이리와, 이리와.” Chang Cheng은 현지 사투리를 들었을 때 매우 친절했습니다.
한게임 슬롯
수많은 액체가 함께 섞이는 것을 관찰하고 데이터를 기록합니다.
무료 메가 슬롯 머신
Zhu Hou는 기대에 찬 얼굴로 Fang Jifan을 돌 보았습니다.
그린 벳 토토
하지만 곧바로 그가 하는 말이 생생하고 생생한 것을 보니 사실 조금은 믿게 되었습니다.