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May and Baker Plc would be capable of immediately paying off all the money it owes to creditors, were it to liquidate all of its working capital, a sign of financial strength.
This means the drug maker has sufficient working capital to pay off its debt if it were to liquidate, a rare occasion, but investors who are proactive would like to have an idea of the liquidity position of an enterprise.
May and Baker’s working capital to debt ratio stood at 1.07, which means net current assets (working capital) could cover 1.7 times long term debt, according to data compiled by MoneyCentral.
That compares with peer rivals such as Fidson Healthcare Plc with a ratio 0.26; Neimeth International Pharmaceutical -0.77, and Mecure Industries Limited, 0.16, according to data gathered by MoneyCentral.
The term working capital to debt ratio refers to a measure that assesses the ability of a company to pay off its debt using working capital. The working capital to debt ratio is useful to understand when a company is nearing liquidation.
May and Baker’s stock is trading at an attractive valuation at a price to earnings ratio of 13.55.
The company’s shares has gained 38.83 percent since the start of the year, outperforming the NGXASI idex’s 6.50 percent.
Investors are liking the company’s stock because of consistent earnings growth, consistent dividend payment, and moderate price to book ratio, benign price to multiples, competent stewards, solid working capital, and future expansion plans.
For instance, May and Baker has been delivering consistent growth in its topline over the past five years, achieving a 5-year CAGR of 29.04 percent between 2019 and 2024, according to data from MoneyCentral.
There are indications this year (2025) is going to be a success as the drug maker started it impressively, as it saw sales spike by 47.97 percent to 9.50 billion as at March 2025 while net income or profit after tax (PAT) was up 74.04 percent to N1.14 billion.
This earnings growth was driven by higher sales volumes and price reviews across product segments as there were sustained demand (including the successful late-2024 launch of Multamin-Plus).
The company has been able to manage financial risk through debt management. The debt to equity ratio stood at 0.72, which means it uses more of equity and less of debt to run its operation.
May and Baker have maintained strong liquidity buffers, with 5-year average current and quick ratios of 1.87x and 1.19x, respectively, pointing to a generally healthy ability to meet near-term obligations, according to data gathered by MoneyCentral.
The manufacturer boasts a reliable aggressive dividend policy that allures investors. For the year ended December 2024, the Board declared a N0.40 per share cash dividend—amounting to a 5.41 percent yield as at when declared.
“May and Baker continues to expand capacity at its Pharma Centre—capable of producing six billion tablets and 37.5 million liquid doses annually— while accelerating innovation across its portfolio. The company’s relentless focus on product development ensures it remains at the forefront of Nigeria’s pharmaceutical and consumer-health markets,” said analysts at Meristem Securities.
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