The Impact of Risk Management, Liquidity, and Leverage on the Financial Performance of Manufacturing Companies Listed on the Indonesia Stock Exchange

Authors

  • Ahmad Nur Budi Utama Universitas Jambi
  • Fera Lufhidarani Pranita Politeknik LP3i Jakarta

DOI:

https://doi.org/10.58812/wsaf.v2i03.1436

Keywords:

Risk Management, Liquidity, Leverage, Financial Performance, Manufacturing Companies

Abstract

This study examines the impact of risk management, liquidity, and leverage on the financial performance of manufacturing companies listed on the Indonesia Stock Exchange (IDX). Utilizing a quantitative approach, data from 160 companies were collected using a structured survey and secondary financial data. The study employs Structural Equation Modeling with Partial Least Squares (SEM-PLS) to analyze the relationships between these factors. The results reveal that all three factors—risk management, liquidity, and leverage—have a significant positive effect on financial performance. Specifically, companies with stronger risk management practices, higher liquidity, and optimal leverage levels tend to demonstrate better financial outcomes. These findings provide valuable insights for corporate managers, investors, and policymakers, highlighting the importance of effective financial management in fostering sustainable business growth in the manufacturing sector. This research contributes to the understanding of financial performance drivers in emerging markets and offers practical recommendations for improving business performance.

References

A. Vionita, “Analisis Kinerja Keuangan Pada Perusahaan Makanan dan Minuman Yang Terdaftar di Bursa Efek Indonesia.” Politeknik Palcomtech, 2022.

M. A. Y. Abbas, D. Setyadi, A. Paminto, and M. Azis, “The antecedents of financial performance and their implications for firm value in mining sector companies listed on the Indonesia Stock Exchange,” J. Law Sustain. Dev., vol. 11, no. 9, p. e991, Oct. 2023, doi: 10.55908/sdgs.v11i9.991.

A. O. Dewi, “Pengaruh Manajemen Keuangan dan Mekanisme Corporate Governance Terhadap Kinerja Keuangan Pada Perusahaan Manufaktur Yang Terdaftar di BEI Periode 2018-2022.” Universitas Medan Area, 2024.

A. Baby, M. A. Mia, and A. A. Pitchay, “A systematic review of financial performance in the manufacturing industry,” Futur. Bus. J., vol. 10, no. 1, pp. 1–20, 2024.

E. Nogueira, S. Gomes, and J. M. Lopes, “Financial Sustainability: Exploring the Influence of the Triple Bottom Line Economic Dimension on Firm Performance.,” Sustain., vol. 16, no. 15, 2024.

S. Ansyari, “Implementation of Risk Management in Strategic Decision Making,” J. Sci. Interdiscip., vol. 1, no. 1, pp. 35–44, 2024.

U. S. Bhutta, A. Tariq, M. Farrukh, A. Raza, and M. K. Iqbal, “Green bonds for sustainable development: Review of literature on development and impact of green bonds,” Technol. Forecast. Soc. Change, vol. 175, p. 121378, 2022.

S. Balaji, L. Shreshta, and K. Sujatha, “A Study on Risk Management in Corporate Business,” Involv. Int. J. Bus., vol. 1, no. 3, pp. 197–209, 2024.

R. M. B. Gunawan, “The Role Of Risk Management In Enhancing Company Resilience,” Eduvest-Journal Univers. Stud., vol. 4, no. 5, pp. 4151–4159, 2024.

S. E. Supriyono, “Kebijakan deviden, kebijakan utang dan resiko sebagai mediasi pengaruh antara kepemilikan manajemen dan kepemilikan institusional terhadap kinerja keuangan perusahaan pada perusahaan manufaktur yang go public di Indonesia,” 2012.

H. Sari, D. Prapanca, V. Setiyono, and F. Wanti, “Impact of Liquidity, Profitability, and Debt Policy Against The Value Of The Company,” European Alliance for Innovation n.o., Sep. 2022. doi: 10.4108/eai.10-8-2022.2320883.

I. Wulandari and I. Wulandari, “The Effect of Profitability, Liquidity and Company Size on Capital Structure in Companies Listed on the Indonesian Stock Exchange,” J. Syntax Admiration, vol. 5, no. 7, pp. 2577–2588, 2024.

K. Q. T. Nguyen, T. H. N. Phan, and N. M. Hang, “The effect of liquidity on firm’s performance: Case of Vietnam,” J. East. Eur. Cent. Asian Res., vol. 11, no. 1, pp. 176–187, 2024.

О. Королович and Ю. Галай, “ANALYSIS OF THE FINANCIAL LEVERAGE EFFECT OF A MANUFACTURING ENTERPRISE,” Економіка та суспільство, no. 64, 2024.

D. R. MASNO, “MODERATION OF CORPORATE GOVERNANCE AND THE EFFECT OF PROFITABILITY, LEVERAGE, COMPANY SIZE, AND DIVIDEND POLICY ON SUSTAINABLE FINANCIAL PERFORMANCE,” Am. J. Manag. Econ. Innov., vol. 6, no. 04, pp. 21–40, 2024.

I. D. Nurcahya, I. Ismawati, and N. Soleha, “EFFECT OF TAX PLANNING, CAPITAL INTENSITY AND LEVERAGE ON COMPANY FINANCIAL PERFORMANCE (EMPIRICAL STUDY OF MANUFACTURING COMPANIES IN THE BASIC MATERIALS SECTOR LISTED ON THE INDONESIAN STOCK EXCHANGE 2017-2021).,” Rev. Account. Tax., vol. 3, no. 1, pp. 30–40, 2024.

T. Supartini, A. Fadjarenie, D. Tarmidi, and L. Oktris, “The Influence of Liquidity, Leverage, Profitability, Company Size, and Gender of the Finance Director on Financial Statement Fraud”.

A. Nilawati and A. Hendrani, “Pengaruh Ukuran Perusahaan, Leverage, Dan Likuidtas Terhadap Kinerja Keuangan,” J. Econ. Bussines Account., vol. 7, no. 3, pp. 5502–5518, 2024.

A. Chopra, A. Singh, R. Debnath, and M. A. Quttainah, “Mapping Corporate Sustainability and Firm Performance Research: A Scientometric and Bibliometric Examination,” J. Risk Financ. Manag., vol. 17, no. 7, p. 304, 2024.

V. H. P. Rodriguez et al., “Challenges in the Relationship between Liquidity and Profitability: Perspectives from a Literature Review,” Rev. Gestão Soc. e Ambient., vol. 18, no. 1, pp. e04923–e04923, 2024.

A. Ali and U. Ahamd, “Liquidity Creation and its Impact on Economic Growth: Moderating Role of Firm Size,” Audit Account. Rev., vol. 3, no. 2, pp. 46–68, 2023.

R. Arhinful and M. Radmehr, “The impact of financial leverage on the financial performance of the firms listed on the Tokyo stock exchange,” SAGE Open, vol. 13, no. 4, p. 21582440231204100, 2023.

K. Wu, “Burden of Leverage: How Leverage Affects Performance of Companies in America,” Int. J. Trade, Econ. Financ., vol. 14, no. 3, 2023.

N. P. Budiadnyani, P. P. R. A. Dewi, and I. G. A. D. Arlita, “Leverage dan kinerja perusahaan dengan ukuran perusahaan sebagai variabel moderasi,” Own. Ris. dan J. Akunt., vol. 7, no. 4, pp. 2874–2883, 2023.

P. Ramadanti, A. N. Salam, A. K. Adisaputra, and A. Z. Arifin, “Impact of Liquidity, Profitability, and Solvency Ratios on Dividend Per Share: A Panel Data Analysis of Mining Companies Listed on the Jakarta Islamic Index,” in International Conference on Islamic Economics (ICIE), 2024, pp. 91–104.

J. Barney, “Firm resources and sustained competitive advantage,” J. Manage., vol. 17, no. 1, pp. 99–120, 1991.

D. H. M. Hasibuan and M. S. M. Tinambunan, “Influence Leverage, Cost Environment, and Performance Environment to Financial Performance”.

S. P. Estiasih, M. Suhardiyah, S. Suharyanto, A. C. Putra, and P. S. Widhayani, “The Effects of Leverage, Firm Size, and Market Value on Financial Performance in Food and Beverage Manufacturing Firms,” J. Apl. Manaj., vol. 22, no. 2, pp. 414–425, 2024.

H. M. Kumshe, B. Umar, and S. A. Modibbo, “Effect of Risks Management on the Financial Performance of Listed Deposit Money Banks in Nigeria,” J. Econ. Manag. Trade, vol. 30, no. 4, pp. 27–36, 2024.

Downloads

Published

2024-11-29

How to Cite

Utama, A. N. B., & Pranita, F. L. (2024). The Impact of Risk Management, Liquidity, and Leverage on the Financial Performance of Manufacturing Companies Listed on the Indonesia Stock Exchange. West Science Accounting and Finance, 2(03), 618–628. https://doi.org/10.58812/wsaf.v2i03.1436

Issue

Vol. 2 No. 03 (2024): West Science Accounting and Finance

Section

Articles

License

Copyright (c) 2024 Ahmad Nur Budi Utama, Fera Lufhidarani Pranita

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.