Financial Performance Dynamics in the Capital-Intensive Raw Materials Sector: A Liquidity-Moderated Approach

Abstract

Purpose – This study aimed to examine the effects of Operational Efficiency and Capital Structure on Financial Performance and to investigate the moderating role of Liquidity in these relationships in Basic Materials companies listed on the Indonesia Stock Exchange. The study was motivated by inconsistent empirical findings regarding the determinants of Financial Performance and the limited evidence concerning the role of Liquidity as a moderating variable.

Design/methodology/approach – This study employed a quantitative explanatory research design using secondary data obtained from annual reports and financial statements of Basic Materials companies listed on the Indonesia Stock Exchange during 2021–2025. The sample was selected using purposive sampling. Panel data regression was employed to examine the effects of Operational Efficiency and Capital Structure on Financial Performance, while interaction terms were used to test the moderating effects of Liquidity.

Findings – The results showed that Operational Efficiency had a positive and significant effect on Financial Performance, whereas Capital Structure did not have a significant effect. Liquidity also did not have a significant direct effect on Financial Performance. Furthermore, Liquidity did not significantly moderate the relationship between Capital Structure and Financial Performance or the relationship between Operational Efficiency and Financial Performance. These findings indicate that Financial Performance in Basic Materials companies is more closely associated with firm size and efficient asset utilization, while Liquidity does not significantly alter the effects of Capital Structure and Operational Efficiency on Financial Performance.

Research limitations/implications – This study was limited to Basic Materials companies listed on the Indonesia Stock Exchange during 2021–2025. The findings imply that companies should improve asset utilization and maintain appropriate Liquidity while managing their financing structure. Future research should extend the observation period, examine other industrial sectors, and incorporate additional financial and non-financial variables to provide a broader explanation of Financial Performance.

JEL : M41, G30, H26