This study examines how working capital investments, financing policies, and capital structure decisions affect financial performance in firms operating in the food, beverage, and tobacco sectors, as well as the chemical, pharmaceutical, petroleum, rubber, and plastic products sectors. The model represents working capital investment and financing policies by the working capital indicator, financial leverage, debt maturity structure by the capital structure indicator, and asset size and net income by control variables. Financial performance indicators were included in the model by creating an index via principal component analysis. Panel data analysis was applied to determine the relationship using data from 22 firms from 2011 to 2024. The study revealed that financial performance in the FBT sector is positively related to a cautious investment strategy, asset size, and net period profit and negatively associated with financial leverage and debt maturity structure. In the CP sector, financial performance was positively related to a cautious investment strategy, financial leverage, asset size, and net period profit. However, it was negatively associated with debt maturity structure. To enhance performance, profitability, sustainability, and success, firms operating in the FBT and CP sectors are recommended to adopt a cautious working capital strategy. This involves keeping long-term debt levels at a minimum in capital structure decisions, maintaining a mindful approach to leverage usage in the FBT sector, and using leverage effectively and efficiently in the CP sector.
Görgel et al. (Thu,) studied this question.