The Effect Of Debt And Business Capital Management On The Financial Performance Of Food And Beverage Msmes In Kramat Jati District: The Mediation Role Of Financial Literacy

Abstract

Micro, Small, and Medium Enterprises (MSMEs) play a strategic role in boosting national economic growth through job creation, increasing public income, and contributing to the Gross Domestic Product (GDP). This study aims to analyze the impact of debt management and business capital on the financial performance of MSMEs in the food and beverage sector in Kramat Jati District, as well as to examine the role of financial literacy in mediating the effects of debt management and business capital on financial performance. A quantitative approach was employed, with a final sample of 100 respondents selected via purposive sampling. Data were collected through Likert-scale questionnaires and analyzed using the Partial Least Squares-Structural Equation Modeling (PLS-SEM) method with SmartPLS 3 software. The results indicate that debt management has a positive and significant effect on both financial literacy (β=0.400; p=0.002) and financial performance (β=0.249; p=0.001). Business capital has a positive and significant effect on financial literacy (β=0.389; p=0.002) but does not significantly affect financial performance (β=0.044; p=0.727). Financial literacy has a positive and significant effect on financial performance (β=0.423; p=0.013). Financial literacy does not mediate the effect of debt management on financial performance (β=0.169; p=0.069) but does mediate the effect of business capital on financial performance (β=0.165; p=0.033).