The influence of capital structure and sales growth on company financial performance with sustainable growth rate as a moderating variable: a conceptual study

DOI

10.2991/978-94-6239-811-5_37How to use a DOI?

Keywords

Capital Structure; Financial Performance; Sales Growth; Sustainable Growth Rate

Abstract

This conceptual research investigates how capital structure and sales growth can affect a company’s financial performance, by placing the sustainable growth rate (SGR) as a moderating factor. The basis for this research comes from inconsistent findings in previous literature, some studies found a positive effect of capital structure and sales growth, while other studies of the variables studied yielded negative results, and still others found no impact. This is compounded by the profitability pressures faced by companies in the non-cyclical consumer sector between 2021 and 2025. In this framework, capital structure is proxied by the Debt-to-Equity Ratio (DER), sales growth is measured on a year-on-year basis, financial performance is assessed via Return on Assets (ROA), and SGR is calculated as ROE multiplied by b (retention rate). Purposive sampling is employed to select non-cyclical consumer goods companies based on specific criteria for the 2021–2025 period, and the data analysis utilizes panel data with Moderated Regression Analysis (MRA). By referring to the trade-off theory and signaling theory, four propositions are put forward: (1) capital structure has a negative effect on financial performance; (2) sales growth has a positive contribution to financial performance; (3) SGR reduces the negative effect of capital structure; and (4) SGR strengthens the positive effect of sales growth on financial performance. This paper aims to contribute to the financial management literature and lay a conceptual foundation for further empirical research.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Juliana Ayu
AU  - Sri Hermuningsih
PY  - 2026
DA  - 2026/10/29
TI  - The influence of capital structure and sales growth on company financial performance with sustainable growth rate as a moderating variable: a conceptual study
BT  - Proceedings of the International Conference on Business, Economic, and Social Sustainability (ICOBES 2026)
PB  - Atlantis Press
SP  - 472
EP  - 482
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-811-5_37
DO  - 10.2991/978-94-6239-811-5_37
ID  - Ayu2026
ER  -