The rich list of Nigerian companies is an idea I have nursed for a while. I have always wondered what it would be like to see a list of companies based on how rich they are. Some limitations made this task a dream but now, with data and technology, I can bring this idea to life. This quick read will show you Nigerian companies along with how much free cash flow they have.
The rich list of Nigerian companies
When I hear the words “rich list”, my first thoughts go to the very popular “The World’s Billionaires”, a compilation that is published by Forbes. It ranks the net-worth of wealthy billionaires in the world.
While reading up on a recent edition, a light bulb lit up in my head! Most people know about the Rich list for people – billionaires by country of citizenship, by country of residence, etc. What about companies? Companies by their incorporation are distinctly separate entities. They have got lives of their own and some are truly wealthy too. Why is a “rich list for companies” not as popular for Nigerian companies? And there goes the inspiration for this post.
How do you measure the wealth of companies?
The first obstacle I had to overcome was identifying an objective way to find “x” (if you know, you know – lol). “Finding x”, therefore required two solutions. These were
Defining how wealthy a company is and
Comparing the wealth of companies
I set out to identify an appropriate measure and I went through books, articles, investigated financial ratios, and came up with a few ideas. The classification of financial models is majorly value and growth models. We needed a model or ratio for measuring wealth. This was another problem that set off another light bulb – who do Nigerians call a rich person?
Without wasting your time, in Nigeria, you are a rich person only when you have f**k you money (the amount of money you need to tell someone to go f**k themselves without facing any kind of setback – money you can throw away). If you want to know more about this, please indulge yourself here. In simpler terms, its how much money you can afford to play with and not suffer repercussions.
So, how do you know how much “f**k you money” companies have?
Free Cash Flow
An incredibly underrated metric, for identifying a great company, is Free cash flow. To describe it simply, it is the amount of money that you would have in your pocket (money in the wallet) if you owned the whole company. You know, the only money that goes into your pocket is the money that can be blown without repercussion. If you put your rent in your pocket…
For companies, free cash flow is the money left after removing any money it needs for its daily operations as well as long term investments, from money it earned from its day to day operations. It is derived by subtracting capital expenditures from the cash generated from operations.
We will define how wealthy a company is by investigating how much free cash flow it has. This is “the first x”
Comparing companies by their free cash flow
Once we completed the task of identifying the right metric, we needed to find the data for all Nigerian companies and rank them. We, at the Investor Hangout, have a ton of data. This was, therefore, an easier task to complete. We pulled the necessary data and put them in a table. The resulting list of is what we call “the Rich List of Nigerian Companies”.
OPERATING CASH FLOW ('MIL)
CAPITAL EXPENDITURES ('MIL)
FREE CASHFLOW ('MIL)
FREE CASHFLOW PER SHARE
So, there you have it, a list of Nigerian companies with the most money to play with. If you want to see the remainder of the not so rich list, scroll to the next page and you will find them.
Wouldn’t you be proud to call yourself an ACCESS, a ZENITHBANK, an ETI, or a DANGCEM? Be real, you know you would. I know I would.
It’s not all sad news for you, though; if you can’t beat them, you join them. If you can’t own all the free cash flow, you could own some, you know? Buying some shares will give you some ownership of the company – whether you get any of that free cash flow is another topic.
Would you like to invest in great Nigerian companies but do not have an account? you can get one here. If you already have an investment account and would like to track, or monitor, metrics like these, head over to the Investor Hangout data hub and find out other company metrics.
Taiwo Megbope is the Co-founder and Chief Growth Officer at Investor Hangout.
He is tasked with ensuring and managing the growth of the Investor Hangout project. His responsibilities include creating and implementing the project's vision as well as executing growth-generating strategies.
Taiwo is an avid researcher and autodidact. In his spare time, he enjoys spending time with his family and friends.