Published: 2026-01-01
The Impact of Leverage and Liquidity on Firm Profitability
DOI: 10.35870/emt.v10i1.5484
Downloads
Abstract
This study aims to find empirical evidence of the influence of leverage (DER) and liquidity (CR) on profitability (ROA). In this research, researchers employed quantitative method using panel data regression. The study population consists of the companies listed on the Jakarta Islamic Index (JII 30) 2020-2024, and the purposive sampling technique is used to determine the sample size. A total of 105 samples from 21 companies were selected for this study. The data analysis techniques use EViews 12. Based on the study findings, profitability (ROA) significantly affected by debt to equity ratio (DER) and current ratio (CR). This study can serve as a guide for businesses looking to boost and enhance performance as well as for investors assessing company performance to gain investment certainty. The practical implication of these findings is the management stoct issuers could maintain the company good performance in order to increase investor trust in a sustainable manner.
Keywords
Article Information
This article has been peer-reviewed and published in the Jurnal EMT KITA. The content is available under the terms of the Creative Commons Attribution 4.0 International License.
-
Issue: Vol. 10 No. 1 (2026)
-
Section: Articles
-
Published: %750 %e, %2026
-
License: CC BY 4.0
-
Copyright: © 2026 Authors
-
DOI: 10.35870/emt.v10i1.5484
AI Research Hub
This article is indexed and available through various AI-powered research tools and citation platforms. Our AI Research Hub ensures that scholarly work is discoverable, accessible, and easily integrated into the global research ecosystem. By leveraging artificial intelligence for indexing, recommendation, and citation analysis, we enhance the visibility and impact of published research.
Arifia Nurriqli
Program Studi Manajemen, STIE Pancasetia Banjarmasin, Kota Banjarmasin, Provinsi Kalimantan Selatan, Indonesia.
Nurnaningsih Utiarahman
Program Studi Manajemen, Universitas Gorontalo, Kabupaten Gorontalo, Provinsi Gorontalo, Indonesia.
Henky Hendrawan
Program Studi Manajemen, Sekolah Tinggi Ilmu Ekonomi Gici, Kota Depok, Provinsi Jawa Barat, Indonesia.
Ngurah Pandji Mertha Agung Durya
Program Studi Akuntansi, Fakultas Ekonomi dan Bisnis, Universitas Dian Nuswantoro, Kota Semarang, Provinsi Jawa Tengah, Indonesia.
Alfiana Alfiana
Program Studi Manajemen, Universitas Muhammadiyah Bandung, Kota Bandung, Provinsi Jawa Barat, Indonesia.
-
Dance, M., & Made, S. I. (2019). Financial ratio analysis in predicting financial conditions distress in Indonesia Stock Exchange. Russian Journal of Agricultural and Socio-Economic Sciences, 86(2), 155–165. https://doi.org/10.18551/rjoas.2019-02.18.
-
Erayanti, R. (2019). Pengaruh likuiditas, profitabilitas, dan leverage terhadap prediksi financial distress. JRAP: Jurnal Riset Akuntansi & Perpajakan, 6(1), 38–50. https://doi.org/10.35838/jrap.v6i01.393.
-
Fianti, F. O., Mayasari, I., & Juniwati, E. H. (2022). Effect of CR and DER on ROA in food and beverage companies. Indonesian Journal of Economics and Management, 2(2), 266–276. https://doi.org/10.35313/ijem.v2i2.3684.
-
Hananiyah, W. M., & Jaya, T. J. (2023). The effect of financial ratio on financial distress in Indonesia Sharia commercial banks. FINANCE: A Research Journal on Islamic Finance, 09(02), 148–167. https://doi.org/10.19109/ifinance.v9i2.19180.
-
Handayani, S., Perwitasari, E. P., & Hermawan, M. A. (2021). The effect of financial ratio to financial distress mediated by profitability ratio in PT Angkasa Pura II (Persero). Jejak: Journal of Economics and Policy, 14(2), 398–414. https://doi.org/10.15294/jejak.v14i2.32023.
-
Hidayati, D. F., & Yuneline, M. H. (2022). Pengaruh current ratio dan debt to equity ratio terhadap financial distress pada perusahaan jasa subsektor perdagangan eceran yang terdaftar di Bursa Efek Indonesia (BEI) periode 2015–2020. Banking and Management Review, 11(1), 1498–1511. https://doi.org/10.52250/bmr.v11i1.509.
-
Ismawati, I., Ramlawati, R., Budiandriani, I., Ramlawati, B., & Pelu, M. F. A. R. (2022). Pengaruh profitabilitas dan likuiditas terhadap financial distress perusahaan telekomunikasi yang terdaftar di Bursa Efek Indonesia. Center of Economic Students Journal, 5(3), 216–227. https://doi.org/10.56750/csej.v5i3.540.
-
Kholisoh, S. N., & Dwiarti, R. (2020). The analysis of fundamental variables and macroeconomic variables in predicting financial distress. Management Analysis Journal, 9(1), 81–90. https://doi.org/10.15294/maj.v9i1.36395.
-
Komala, F., & Triyani, Y. (2020). Analisis rasio keuangan terhadap financial distress dengan struktur kepemilikan sebagai variabel moderasi. Jurnal Akuntansi, 8(2), 176–205. https://doi.org/10.46806/ja.v8i2.619.
-
Laksmiwati, M., Mappadang, A., Indrabudiman, A., & Riza, V. G. (2021). Determination of financial performance on prediction financial distress. Asian Journal of Economics, Business and Accounting, 21(22), 46–57. https://doi.org/10.9734/ajeba/2021/v21i2230523.
-
Maximillian, N., & Septina, F. (2022). The effect of profitability, liquidity, and solvency on financial distress of textile and garment companies in Indonesia. Ecodemica: Jurnal Ekonomi Manajemen Dan Bisnis, 6(2), 150–161. https://doi.org/10.31294/eco.v6i2.12933.
-
Muliadi, S., Sulasmi, S., Susanti, S., Santoso, A., & Yanti, E. M. (2023). Determinants of financial performance in Islamic insurance companies moderated by good corporate governance. JAS (Jurnal Akuntansi Syariah), 7(2), 219–236. https://doi.org/10.46367/jas.v7i2.1561.
-
Naibaho, E. A. B., & Natasya, A. (2023). Ratio analysis to financial distress with profitability as a moderation variable. Jurnal Reviu Akuntansi Dan Keuangan, 13(2), 412–440. https://doi.org/10.22219/jrak.v13i2.24506.
-
Ngabito, R. A. (2024). Pengaruh likuiditas, aktivitas, profitabilitas dan leverage terhadap financial distress. Syntax Literate: Jurnal Ilmiah Indonesia, 9(1), 7–18. https://doi.org/10.36418/syntax-literate.v9i1.14685.
-
Nugroho, A., Wasiaturrahma, W., & Anggia, P. (2021). Jakarta Islamic Index: Covid-19 pandemic and potential financial distress. JEBIS: Jurnal Ekonomi Dan Bisnis Islam, 7(2), 210–230. https://doi.org/10.20473/jebis.v7i2.26147.
-
Pebriani, R. A., Syafitri, L., & Meiriasari, V. (2024). Financial distress: Ratio of financial statements of mining and metals companies. Islamic Banking: Jurnal Pemikiran Dan Pengembangan Perbankan Syariah, 10(1), 129–146. https://doi.org/10.36908/isbank.v10i1.1205.
-
Rachman, D., Afendi, A., Wahab, W., & Rasyidin, M. (2023). The influence of company size, liquidity, profitability, and leverage on Islamic social report disclosure. AL-ARBAH: Journal of Islamic Finance and Banking, 5(2), 105–124. https://doi.org/10.21580/al-arbah.2023.5.2.18001.
-
Saputra, Y., Al-Azizah, U. S., & Nurhayadi, Y. (2021). Determinan struktur modal pada perusahaan yang terdaftar di Jakarta Islamic Index. IQTISHADUNA: Jurnal Ilmiah Ekonomi Kita, 10(2), 200–214. https://doi.org/10.46367/iqtishaduna.v10i2.419.
-
Sari, E. E. M., & Isbanah, Y. (2024). Pengaruh likuiditas, sales growth, firm size, arus kas operasi, CEO duality, dan intellectual capital terhadap financial distress. JIM: Jurnal Ilmu Manajemen, 12(1), 15–31. https://doi.org/10.26740/jim.v12n1.p15-31.
-
Sariroh, H. (2021). Pengaruh likuiditas, leverage, profitabilitas, dan ukuran perusahaan terhadap financial distress di sektor trade, service, and investment. Jurnal Ilmu Manajemen, 9(3), 1227–1240. https://doi.org/10.26740/jim.v9n3.p1227-1240.
-
Sasongko, H., Ilmiyono, A. F., & Tiaranti, A. (2021). Financial ratios and financial distress in retail trade sector companies. JIAFE: Jurnal Ilmiah Akuntansi Fakultas Ekonomi, 7(1), 63–72. https://doi.org/10.34204/jiafe.v7i1.3380.
-
Septyanto, D., Welandasari, N. F., & Sayidah, N. (2022). An empirical test of the financial ratio effect on financial distress in Indonesia (study in garment and textile industry). Economics and Business Quarterly Reviews, 5(2), 222–230. https://doi.org/10.31014/aior.1992.05.02.428.
-
Sihombing, J. J. A., & Angela, A. (2024). Pengaruh profitabilitas, financial leverage dan likuiditas terhadap financial distress pada perusahaan food and beverage di Indonesia. JAFTA: Journal of Accounting, Finance, Taxation, and Auditing, 6(1), 85–101. https://doi.org/10.28932/jafta.v6i1.9231.
-
Silvia, D., & Yulistina. (2022). Pengaruh current ratio, return on asset, debt to asset terhadap financial distress selama masa pandemi. Global Financial Accounting Journal, 6(1), 89. https://doi.org/10.37253/gfa.v6i1.6528.
-
Siregar, I. G., Soenaryo, D., & Kirana, A. I. (2023). Analisis financial distress dengan profitabilitas sebagai variabel moderasi. Balance Vocation Accounting Journal, 7(1), 60–78. https://doi.org/10.31000/bvaj.v7i1.7518.
-
Sugiharto, B., Putri, T. E., & Nur’alim, R. M. (2021). The effect of liquidity, leverage and sales growth on financial distress with profitability as a moderating variable. JASS: Journal of Accounting For Sustainable Society, 3(1), 45–69. https://doi.org/10.35310/jass.v3i01.888.
-
Tanjung, P. R. S. (2023). The effect of current ratio, return on assets, and debt to equity ratio on financial distress. EPRA: International Journal of Economic and Business Review, 11(8), 25–33. https://doi.org/10.36713/epra13893.
-
Ugur, M., Solomon, E., & Zeynalov, A. (2022). Leverage, competition, and financial distress hazard: Implications for capital structure in the presence of agency costs. Economic Modelling, 108, 105740. https://doi.org/10.1016/j.econmod.2021.105740.
-
Utiarahman, N. (2018). Analisis perputaran persediaan terhadap kas pada perusahaan PT. Rocky Mitra Bangunan. Gorontalo Management Research, 1(1), 1–15.
-
Utiarahman, N. (2022). Influence of element working capital turnover to profitability in pharmaceutical companies listed in Indonesia Stock Exchange. European Journal of Research Development and Sustainability (EJRDS), 3(1), 77-83.
-
Wahyuni, S. (2018). Pengaruh current ratio dan debt to equity ratio terhadap return on assets pada perusahaan makan dan minuman yang terdaftar di Bursa Efek Indonesia (BEI) periode 2013–2017. Jurnal Sekuritas, 3(1), 289–299.
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
1. Copyright Retention and Open Access License
Authors retain copyright of their work and grant the journal non-exclusive right of first publication under the Creative Commons Attribution 4.0 International License (CC BY 4.0).
This license allows unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
2. Rights Granted Under CC BY 4.0
Under this license, readers are free to:
- Share — copy and redistribute the material in any medium or format
- Adapt — remix, transform, and build upon the material for any purpose, including commercial use
- No additional restrictions — the licensor cannot revoke these freedoms as long as license terms are followed
3. Attribution Requirements
All uses must include:
- Proper citation of the original work
- Link to the Creative Commons license
- Indication if changes were made to the original work
- No suggestion that the licensor endorses the user or their use
4. Additional Distribution Rights
Authors may:
- Deposit the published version in institutional repositories
- Share through academic social networks
- Include in books, monographs, or other publications
- Post on personal or institutional websites
Requirement: All additional distributions must maintain the CC BY 4.0 license and proper attribution.
5. Self-Archiving and Pre-Print Sharing
Authors are encouraged to:
- Share pre-prints and post-prints online
- Deposit in subject-specific repositories (e.g., arXiv, bioRxiv)
- Engage in scholarly communication throughout the publication process
6. Open Access Commitment
This journal provides immediate open access to all content, supporting the global exchange of knowledge without financial, legal, or technical barriers.