Capital Intensity Ratio, Asset Growth, and Sales Growth as Determinants of Financial Performance

Abstract

Research aims: This study examines the effects of Capital Intensity Ratio, Asset Growth, and Sales Growth on the financial performance of food and beverage companies listed on the Indonesia Stock Exchange during 2022–2024.

Design/Methodology/Approach: A quantitative approach was employed using secondary data from annual financial statements. Purposive sampling yielded 14 companies with 42 firm-year observations. Multiple linear regression analysis was conducted using IBM SPSS after satisfying classical assumption tests.

Research findings: Capital Intensity Ratio has no significant effect on financial performance measured by Return on Assets (ROA). In contrast, Asset Growth and Sales Growth positively and significantly affect financial performance. Collectively, the three variables significantly explain corporate financial performance, indicating that asset and sales expansion contribute more to profitability than fixed asset investment.

Theoretical contribution/Originality: This study extends Agency Theory by showing that financial performance is influenced more by effective resource development and management than by capital investment alone. It also provides new evidence from Indonesia’s food and beverage sector during 2022–2024 by simultaneously examining Capital Intensity Ratio, Asset Growth, and Sales Growth.

Practitioner/Policy implication: Managers should prioritize strategies that enhance asset productivity and sustain sales growth to improve profitability, while investors may consider asset growth and sales growth as key indicators of future financial performance.

Research limitation/Implication: The study is limited by its three-year observation period, small sample size, and focus on a single industry. Future research should use longer observation periods, broader industry coverage, panel data analysis, and additional variables such as leverage, liquidity, firm size, and corporate governance.

Keywords: Capital Intensity Ratio, Asset Growth, Sales Growth, Financial Performance.