LIQUIDITY AND CAPITAL STRUCTURE EFFICIENCY : EMPIRICAL EVIDENCE FROM PT MIDI UTAMA INDONESIA TBK

Abstract

This study aims to determine the effect of liquidity on the financial performance of PT Midi Utama Indonesia Tbk during the 2015–2024 period using an empirical approach. Liquidity is measured through several financial ratios, namely the Current Ratio (CR), Quick Ratio (QR), and Cash Ratio. While company financial performance is measured using the Debt to Equity Ratio (DER) as an indicator of capital structure. This study employed a quantitative method with multiple linear regression analysis processed using SPSS software version 16.0. The results show that the CR and QR variables have a significant influence on DER, while the Cash Ratio does not have a significant partial effect. However, simultaneously, all three liquidity variables have a significant influence on DER with a high coefficient of determination (R²). These findings confirm that optimal liquidity management can improve the efficiency of a company's capital structure, while excessive liquidity can indicate inefficient use of assets. Therefore, the balance between liquidity and capital structure is a critical factor in achieving sustainable financial performance.