DETERMINANTS OF FINANCIAL PERFORMANCE IN MANUFACTURING FIRMS: THE ROLE OF CAPITAL STRUCTURE, LIQUIDITY, AND FIRM SIZE
Keywords:
Capital Structure, Liquidity, Firm Size, Financial PerformanceAbstract
Purpose – This study examines the effect of capital structure, liquidity, and firm size on financial performance. This topic is important because financial performance reflects a company’s ability to generate profits and sustain its operations, while internal financial factors such as debt policy, liquidity position, and firm scale play a crucial role in determining that performance.
Design/methodology/approach – This research employs a quantitative approach using secondary data derived from companies’ financial statements. The analysis is conducted using multiple regression, with hypothesis testing through t-tests to assess partial effects and F-tests to evaluate simultaneous effects of the independent variables on financial performance.
Findings/Results – The results show that capital structure has a negative and significant effect on financial performance, while liquidity and firm size have positive and significant effects. These findings indicate that lower reliance on debt and stronger liquidity positions contribute to improved profitability, and larger firms tend to perform better financially.
Originality/Value – This study highlights the importance of balancing debt usage, maintaining liquidity, and leveraging firm size to enhance financial performance. The findings provide practical implications for managers in making financial decisions and contribute to the existing literature by offering empirical evidence on the combined effects of these key financial factors.
Downloads
References
Abor, J. (2017). Debt policy and performance of SMEs: Evidence from emerging markets. Journal of Risk Finance, 18(4), 321–335. https://doi.org/10.1108/JRF-01-2017-0013
Brigham, E. F., & Houston, J. F. (2021). Fundamentals of financial management (16th ed.). Cengage Learning.
Dang, C., Li, Z. F., & Yang, C. (2018). Measuring firm size in empirical corporate finance. Journal of Banking and Finance, 86, 159–176. https://doi.org/10.1016/j.jbankfin.2017.09.006
Darmayanti, N. P. A., & Yanti, L. D. (2019). The effect of liquidity, capital structure, and firm size on profitability. E-Jurnal Manajemen, 8(4), 2159–2188.
Hery. (2017). Financial statement analysis. Jakarta: Grasindo.
Hidayat, W. W. (2019). Pengaruh struktur modal dan likuiditas terhadap kinerja keuangan. Jurnal Ilmu dan Riset Manajemen, 8(5), 1–15.
Ibrahim, M., & Isiaka, A. (2020). Effect of leverage on firm performance: Evidence from Nigeria. Journal of Accounting and Finance, 20(1), 45–57. https://doi.org/10.33423/jaf.v20i1.2250
Jensen, M. C. (2017). Agency costs of free cash flow and corporate finance. American Economic Review, 107(5), 323–329. https://doi.org/10.1257/aer.p20171082
Kasmir. (2019). Financial statement analysis. Jakarta: Rajawali Pers.
Khan, A., & Ali, S. (2017). Impact of capital structure on firm performance. Journal of Finance and Economics, 5(2), 87–92. https://doi.org/10.12691/jfe-5-2-4
Lee, J. (2019). Does size matter? Firm size and financial performance. International Journal of Financial Studies, 7(2), 1–15. https://doi.org/10.3390/ijfs7020024
Nguyen, T. H., & Nguyen, H. A. (2020). Capital structure and firm performance: Evidence from emerging markets. Journal of Asian Finance, Economics and Business, 7(6), 97–105. https://doi.org/10.13106/jafeb.2020.vol7.no6.097
Ongore, V. O., & Kusa, G. B. (2017). Determinants of financial performance of commercial banks. International Journal of Economics and Financial Issues, 7(1), 237–252.
Pratama, A., & Wiksuana, I. G. B. (2018). Pengaruh ukuran perusahaan dan leverage terhadap profitabilitas. E-Jurnal Manajemen, 7(3), 1289–1318.
Putra, A. A. N. B., & Badjra, I. B. (2018). Pengaruh leverage, pertumbuhan penjualan, dan ukuran perusahaan terhadap profitabilitas. E-Jurnal Manajemen, 7(7), 3502–3531.
Rajan, R. G., & Zingales, L. (2018). Financial dependence and growth. American Economic Review, 108(3), 559–586. https://doi.org/10.1257/aer.108.3.559
Ross, S. A., Westerfield, R., & Jordan, B. D. (2019). Fundamentals of corporate finance (12th ed.). McGraw-Hill.
Sari, N., & Widyarti, E. T. (2016). The effect of capital structure, liquidity, and firm size on financial performance. Jurnal Manajemen, 5(2), 1–10.
Setiawan, R., & Mahardika, D. P. K. (2019). The influence of liquidity, leverage, and firm size on company performance. International Journal of Scientific and Technology Research, 8(10), 172–176.
Siregar, S. (2017). Metode penelitian kuantitatif. Jakarta: Kencana.
Subramanyam, K. R. (2018). Financial statement analysis (11th ed.). McGraw-Hill.
Sutrisno. (2017). Manajemen keuangan: Teori, konsep, dan aplikasi. Yogyakarta: Ekonisia.
Utami, W., & Purnomo, B. S. (2020). The effect of capital structure and liquidity on financial performance. International Journal of Economics and Business Administration, 8(1), 123–135.
Wahyuni, S., & Erawati, T. (2019). Pengaruh likuiditas, leverage, dan ukuran perusahaan terhadap profitabilitas. Jurnal Akuntansi, 6(2), 45–56.
Widarjo, W., & Setiawan, D. (2018). The effects of firm size, leverage, and profitability on firm value. International Journal of Economics and Financial Issues, 8(3), 81–87.
Wijaya, A., & Sedana, I. B. P. (2020). The effect of liquidity and leverage on financial performance. American Journal of Humanities and Social Sciences Research, 4(6), 192–198.
Yanti, L. D., & Darmayanti, N. P. A. (2019). The effect of liquidity, capital structure, and firm size on profitability. E-Jurnal Manajemen, 8(4), 2159–2188.
Yusuf, M., & Surjaatmadja, S. (2018). Analysis of financial performance using financial ratios. International Journal of Economics and Financial Issues, 8(3), 45–51.
Zutter, C. J., & Smart, S. B. (2022). Principles of managerial finance brief (9th ed.). Pearson.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Mangasi Sinurat, Nursaimatussaddiya, Rico Nur Ilham, Frengki Putra Ramansyah
This work is licensed under a Creative Commons Attribution 4.0 International License.
