Liquidity Impact on Profitability through Capital Structure Mediation and Firm Size Moderation in Plastics and Packaging

Abstract

The objective of this study is to examine how liquidity influences profitability, with capital structure acting as a mediating variable and firm size serving as a moderating variable in the relationship. The research strategy applied is a causal study. The study population consists of seven companies in the plastics and packaging subsector listed on the Indonesia Stock Exchange (IDX) during the 2019–2023 period, selected based on predetermined criteria. These seven companies were chosen using a saturated sampling method. The analytical method used in this study was panel data regression. The findings reveal that liquidity has a positive and significant effect on firm size, while it has a negative and significant effect on capital structure. However, capital structure does not significantly influence profitability, and firm size likewise shows no significant effect on profitability. In addition, liquidity does not directly affect profitability. Nevertheless, liquidity has a positive and significant indirect effect on profitability through capital structure as a mediating variable, but it does not exert an indirect effect on profitability through firm size as a moderating variable.