The Effect of Liquidity, Leverage, and Firm Size on the Financial Performance of Manufacturing Companies Listed on the IDX in 2024

Abstract

This study aims to analyze the effect of liquidity, leverage, and firm size on the financial performance of manufacturing companies listed on the Indonesia Stock Exchange (IDX) in 2024. Financial performance is measured using Return on Assets (ROA), liquidity with Current Ratio (CR), leverage with Debt to Equity Ratio (DER), and firm size using the natural logarithm of total assets. This research employs a quantitative explanatory approach with a sample of 117 manufacturing companies selected through purposive sampling. Secondary data were obtained from annual financial reports published on the official IDX website (www.idx.co.id). Data analysis was performed using multiple linear regression preceded by classical assumption tests (normality, multicollinearity, and heteroscedasticity). The results of the partial hypothesis test show that liquidity does not significantly influence financial performance (t = -1.782; sig. = 0.077 > 0.05), leverage has a positive and significant influence on financial performance (t = 4.825; sig. = 0.000 < 0.05), and firm size does not significantly influence financial performance (t = 0.899; sig. = 0.371 > 0.05). Simultaneously, all three variables significantly influence financial performance (F = 9.473; sig. = 0.000 < 0.05) with a coefficient of determination (R-squared) of 0.201, indicating that 20.1% of the variation in financial performance can be explained by these three variables, while the remaining 79.9% is explained by other factors outside the research model. These findings imply that efficient debt management is the most critical factor in improving financial performance of manufacturing companies.