Only Four NGX Firms Pass Benjamin Graham’s “Gold Standard” Test

In an era of high interest rates and global energy shocks, liquidity has become the ultimate survival metric for Nigerian corporates.

A new analysis by MoneyCentral of 29 major firms on the Nigerian Exchange (NGX) reveals a startling reality: only Unilever, Presco, Julius Berger, and May & Baker meet the legendary investor Benjamin Graham’s “2:1 Current Ratio” benchmark.

This “Gold Standard” requires a company to hold at least ₦2.00 in current assets for every ₦1.00 of current liabilities While these four firms boast a robust safety buffer, the broader market is walking a financial tightrope, with 25 other majors collectively holding a negative net working capital of ₦1.09 trillion.

The Liquidity Leaders: Passing the 2:1 Test

These firms are uniquely positioned to navigate the $150 oil threat and rising ₦1,700 diesel costs without relying on expensive external financing.

Source: MoneyCentral Research

The “Tightrope” Sectors: Where Liabilities Outpace Assets

Most Nigerian industrial giants are currently operating with current ratios below 1.0, meaning their short-term debts exceed their liquid assets. This often forces companies to maintain high-interest overdrafts or delay supplier payments.

The Cement Giants (Energy-Intensive Pressure)

Despite having the highest market caps, cement makers are liquidity-constrained due to massive capital expenditure on alternative fuel systems.

• Lafarge Africa (1.35): The most liquid of the “Big Three.”

• BUA Cement (0.95): Faces pressure as energy hits 42% of its COGS.

• Dangote Cement (0.75): Despite ₦1.21tn in free cash flow, its massive short-term debt obligations for expansion keep its current ratio below 1.0.

Consumer Goods: The “Inflation Trap”

High input costs and the Nigerian Breweries price hikes reflect a sector struggling with raw material liabilities.

• Nascon Allied (1.74): Moving closer to the Graham benchmark.

• Nestlé Nigeria (0.77): Impacted by FX-linked raw material obligations.

• Cadbury (0.71) & Nigerian Breweries (0.68): High susceptibility to sudden macroeconomic shocks.

Utility & Energy: Running Lean

In the utility sector, firms like Geregu Power (1.12) and Transcorp Power (1.24) maintain relatively stable ratios, backed by consistent “Take-or-Pay” cash flows from the grid. However, the oil and gas sector remains highly volatile:

• Seplat Energy (1.09): Balanced liquidity, supported by its $242m gas revenue hedge.

• Oando (0.31): Reflects a highly leveraged balance sheet with significant short-term debt compared to liquid assets.

Get More of our proprietary news and analysis as MoneyCentral is now on WhatsApp Channels  Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!