Indonesian Journal of Law and Economics Review
Vol 20 No 2 (2025): May
Financial Accounting

Liquidity Indicators Correlate Positively with Financial Returns at Baghdad Soft Drinks
Indikator Likuiditas Berkorelasi Positif dengan Pengembalian Keuangan di Baghdad Soft Drinks


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  • Thar Saadoon Shnaishel*,
  • Qassim Mahal Herez
Thar Saadoon Shnaishel
College of Administration and Economics, University of Sumer, Iraq *

(*) Corresponding Author
Picture in here are illustration from public domain image or provided by the author, as part of their works
DOI: https://doi.org/10.21070/ijler.v20i2.1297
Published May 29, 2025
Keywords
  • Liquidity,
  • ROA,
  • Financial Leverage,
  • Quick Ratio,
  • Baghdad Soft Drinks
How to Cite
Shnaishel, T. S., & Herez, Q. M. (2025). Liquidity Indicators Correlate Positively with Financial Returns at Baghdad Soft Drinks. Indonesian Journal of Law and Economics Review, 20(2), 10.21070/ijler.v20i2.1297. https://doi.org/10.21070/ijler.v20i2.1297

Copyright (c) 2025 Thar Saadoon Shnaishel (Author)

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

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Abstract

General Background: Liquidity management plays a critical role in determining the financial sustainability of firms, especially in emerging economies with volatile macroeconomic conditions. Specific Background: In Iraq's industrial sector, firms like Baghdad Soft Drinks Company face liquidity challenges due to currency fluctuations, imported inputs, and evolving consumer demands. Knowledge Gap: Despite global literature affirming the liquidity-performance nexus, few empirical studies have addressed this relationship in Iraqi industrial firms using modern econometric models. Aims: This study investigates the impact of liquidity indicators—current ratio, quick ratio, and cash ratio—on financial performance, measured by return on assets (ROA), controlling for firm size and financial leverage. Results: Using multiple linear regression on data from 2015–2023, findings show all liquidity indicators significantly and positively affect ROA, while firm size also exerts a strong positive influence; financial leverage was statistically insignificant. The model explains 89% of the variance in ROA. Novelty: The study offers a contextualized analytical model adapted to Iraq’s industrial sector, integrating both agency and resource-based theories. Implications: The results highlight strategic opportunities for firms to enhance profitability by optimizing liquidity structures and scaling operations. This research fills a gap in regional financial literature and provides a replicable methodology for similar economies.
Highlight : 

  • Liquidity indicators (current, quick, cash ratios) significantly improve financial performance (ROA).

  • Firm size positively affects profitability, while financial leverage showed no significant effect.

  • The model explains 89% of ROA variance—demonstrating liquidity's critical role.

Keywords : Liquidity, ROA, Financial Leverage, Quick Ratio, Baghdad Soft Drinks

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