The Role of Liquidity in Determining Firm Performance: An Empirical Study on Manufacturing Companies in Indonesia

Abstract

This study aims to examine the role of liquidity in influencing firm performance, especially for manufacturing companies operating in Indonesia. The research variables include firm performance as the dependent variable, capital structure and firm size as independent variables, operating assets as a control variable, and liquidity as a moderating variable. The study was conducted on 123 manufacturing companies in Indonesia for the 2019-2021 period. The data collection method used purposive sampling, while the data analysis used multiple regression techniques. The results showed that liquidity had a negative effect, and operating assets and firm size had a positive effect on firm performance. While the capital structure has a negative effect on firm performance at a significance of less than 10%. Liquidity plays an important role as a moderating variable on firm size and capital structure in influencing firm performance.