This study investigates how liquidity and leverage shape financial performance in sub-Saharan Africa’s listed healthcare firms and concludes that internal liquidity capacity is a more reliable driver of performance than debt. Using an ex post facto design, the study examines 60 firm year observations for 12 listed healthcare and pharmaceutical firms across six countries over 2020–2024. It measures performance with return on assets (ROA), return on equity (ROE), and Tobin’s Q, while liquidity and leverage are proxied by current and debt–equity ratios. Fixed-effects panel regression with robust standard errors is employed after confirming heteroskedasticity and overall model significance through Wald tests. Liquidity exerts a positive and statistically significant impact on ROA (β = 0.003706, p < 0.01) and reinforces ROE in complementary estimations, demonstrating that stronger liquidity positions consistently enhance accounting-based financial performance in this capital-constrained sector. By contrast, leverage shows negative and statistically insignificant effects on ROA (β = 0.113666, p = 0.257), ROE (β = −1.42683, p = 0.109), and Tobin’s Q (β = −0.64563, p = 0.612), providing no evidence that higher debt improves either accounting returns or market valuation. Collectively, these results strongly support the primacy of internal financial flexibility over external borrowing for sustaining performance in sub-Saharan African healthcare firms and offer robust, region-wide empirical grounding for refining resource-based, pecking order, and trade-off arguments in healthcare capital structure debates.
Dangs et al. (2026) studied this question.