LEVERAGE, LIQUIDITY AND PROFIT GROWTH: EVIDENCE FROM INDONESIA

The profit growth attracts the attention of shareholders in the capital market, and lenders are willing to lend money. For suppliers, this growth ensures that the companies can buy the materials. Based on the theoretical issue, this study aims to examine the impact of leverage and liquidity on the profit growth. All the food and beverage enterprises listed in the Indonesian capital market from 2015 to 2023 are employed as the samples, with a total of fourteen. Furthermore, this investigation utilizes the secondary data modeled by regression to prove these two relationships. After processing the data, this investigation concludes that the more leveraged the firms, the higher their profit growth. Similarly, this positive tendency occurs in the relationship between liquidity and profit growth: the more liquid the companies, the higher their growth. Based on these pieces of evidence, this study suggests that managers utilize debt to enhance profits by considering the tax shield as a benefit for debt application. Additionally, the managers should utilize the excess liquidity to purchase materials at a discounted price from the supplier, thereby increasing this growth.