West Science Business and Management
Vol. 2 No. 04 (2024): West Science Business and Management

Analysis of the Effect of Liquidity, Leverage, and Profitability on the Financial Performance of Companies in the Indonesian Capital Market

Basuki Toto Rahmanto (Universitas Ary Ginanjar)
KMT Lasmiatun (Universitas Muhammadiyah Semarang)
Nursyam Ar (Universitas Indonesia Timur)
Ramli Toalib (Universitas Indonesia Timur)
Syamsinar Syamsinar (Universitas Indonesia Timur)



Article Info

Publish Date
31 Dec 2024

Abstract

This study examines the influence of leverage, liquidity, and profitability on the financial performance of companies listed on the Indonesian Capital Market. A quantitative approach was utilized, involving 150 companies, with data measured using a Likert scale (1–5) and analyzed using Structural Equation Modeling-Partial Least Squares (SEM-PLS 3). The findings reveal that leverage and profitability significantly and positively impact financial performance, with profitability demonstrating the strongest effect. Liquidity also positively influences financial performance, albeit to a lesser extent. Collectively, the three variables explain 62% of the variance in financial performance, highlighting their interdependence and critical role in driving firm success. The study provides valuable insights for corporate managers and policymakers in emerging markets, emphasizing the importance of strategic financial planning to ensure sustainable growth.

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Journal Info

Abbrev

wsbm

Publisher

Subject

Decision Sciences, Operations Research & Management Economics, Econometrics & Finance

Description

The Editors invite writers and experts to publish and share their ideas through scientific and empirical research in the field of Management and Business. The main objective of this publication is to improve theory, concept, and practice in the field of management and business. Dissemination of ...