The Effect of Capital Structure, Total Assets Turnover, and Liquidity on The Financial Performance of Companies Listed on The Egyptian Stock Exchange

Abstract

This research seeks to investigate the impact of capital structure, total assets turnover, and liquidity on the financial performance of companies listed on the Egyptian Stock Exchange. The researcher relied on a sample of 48 companies across five sectors, according to the nature of each of these sectors in terms of type of industry, as follows: food Sector, manufacturing sector, pharmaceutical sector, real estate sector, and services sector from 2019 to 2022. The researcher used the panel data from these companies in panel regression analysis. The research findings highlighted three key outcomes. First, higher debt levels, measured by debt ratio, are found to have a significant negative impact on profitability measured by RoA and RoE across most sectors. Second, total assets turnover has a significant positive effect on RoA but mixed results for RoE and Tobin's Q across sectors. Third, liquidity positively influences RoA, however, no consistent impact is seen on long-term shareholder value measured through RoE and Tobin's Q. Finally, control variables firm size and assets tangibility have varying effects depending on the sector and performance measure. Their impact on financial performance is thus contingent on context.