Analysis of the Impact of Liquidity on Corporate Profitability with Debt Policy as a Mediating Variable: A Study of Manufacturing Companies Listed on the Indonesia Stock Exchange

Pricillia Karen Todar; Sweetly Mumu; Pricilia A. Chuanda; Tonny S. Maringka; Farly C.M Teneh

doi:10.63922/ijebir.v5i05.6140

Pricillia Karen Todar Sekolah Tinggi Ilmu Ekonomi Eben Haezar Manado
Sweetly Mumu Sekolah Tinggi Ilmu Ekonomi Eben Haezar Manado
Pricilia A. Chuanda Sekolah Tinggi Ilmu Ekonomi Eben Haezar Manado
Tonny S. Maringka Sekolah Tinggi Ilmu Ekonomi Eben Haezar Manado
Farly C.M Teneh Sekolah Tinggi Ilmu Ekonomi Eben Haezar Manado

DOI: https://doi.org/10.63922/ijebir.v5i05.6140

Keywords: Liquidity, Current Ratio, Profitability, Return on Assets, Debt Policy, Debt to Equity Ratio, Mediation, Manufacturing Companies

Abstract

The manufacturing sector is one of the main pillars of the Indonesian economy, contributing approximately 18–20 percent of national GDP. Faced with post-COVID-19 global dynamics, exchange rate volatility, and intense market competition, manufacturing companies are required to maintain financial health through optimal liquidity management and financing structures. This study aims to analyze the effect of liquidity on the profitability of manufacturing companies with debt policy as a mediating variable. The research population is all manufacturing sector companies listed on the Indonesia Stock Exchange during the 2020–2024 period. The sample was determined using the purposive sampling method, resulting in 325 units of observation. Data were sourced from annual financial reports downloaded from the official BEI website. The variables in this study include liquidity (Current Ratio/CR) as the independent variable, profitability (Return on Assets/ROA) as the dependent variable, and debt policy (Debt to Equity Ratio/DER) as the mediating variable. Data analysis techniques used multiple linear regression analysis and Sobel Test with IBM SPSS Statistics. The results show: (1) Liquidity (CR) has a positive and significant effect on profitability (ROA) with t = 7.5703 and sig. = 0.000; (2) Liquidity (CR) has a negative and significant effect on debt policy (DER) with t = -8.8849 and sig. = 0.000; (3) Debt policy (DER) does not have a significant effect on profitability (ROA) with t = 0.3467 and sig. = 0.729; (4) Debt policy (DER) is not proven to mediate the effect of liquidity on profitability with Sobel Z = -0.3464 and sig. = 0.729. The conclusion is that liquidity management is a direct and significant determinant of manufacturing company profitability in Indonesia, while debt policy has not been proven to act as an effective transmission mechanism between liquidity and profitability.

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