FINANCIAL PERFORMANCE AND PROFIT GROWTH IN ASEAN MANUFACTURING FIRMS

Abstract

This study aims to examine the effect of financial performance on profit growth in manufacturing companies in the ASEAN region by focusing on Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). A quantitative approach was employed using secondary data from the financial statements of 83 manufacturing firms listed on six major ASEAN stock exchanges over the period 2018–2022, resulting in 415 firm-year observations. Multiple linear regression was applied, incorporating control variables such as Total Asset Turnover, firm size, Quick Ratio, Gross Domestic Product, and a COVID-19 dummy variable. The findings reveal that only Return on Equity has a positive and significant effect on profit growth, while Return on Assets and Net Profit Margin do not show a significant influence. These results indicate that profit growth in ASEAN manufacturing firms is driven more by the effectiveness of equity management than by asset utilization efficiency or sales margin generation. This study contributes to the literature by demonstrating that profitability ratios do not have equal predictive power for profit growth in a cross-country manufacturing context. From a practical perspective, the results suggest that managers should prioritize capital structure optimization and equity utilization strategies to achieve sustainable profit growth