ANALYSIS OF THE IMPACT OF LIQUIDITY AND SOLVENCY ON THE FINANCIAL PERFORMANCE OF FOOTWEAR MANUFACTURING COMPANIES IN INDONESIA
Keywords:
liquidity, solvency, financial performance, current ratio, debt to assets ratioAbstract
This study aims to analyze the effect of liquidity and solvency on the financial performance of footwear manufacturing companies in Indonesia. Financial performance is measured using Return on Assets (ROA), while liquidity is measured using the Current Ratio (CR) and solvency is measured using the Debt to Assets Ratio (DAR). The research uses a quantitative approach based on secondary financial data for a 30-observation dataset. Multiple linear regression analysis is employed to examine the partial and simultaneous effects of liquidity and solvency on financial performance. The results indicate that liquidity has a positive and statistically significant effect on financial performance, while solvency has a negative and statistically significant effect on financial performance. The simultaneous test also indicates that liquidity and solvency significantly affect financial performance. The coefficient of determination shows that 57.6% of the variation in ROA can be explained by liquidity and solvency, while the remaining 42.4% is explained by other factors outside the research model. These findings highlight the importance of maintaining an adequate liquidity position and managing debt efficiently to support sustainable financial performance in footwear manufacturing companies.
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