The Effect of Financial Performance on Profitability: a Systematic Review and Multidimensional Synthesis

Abstract

Purpose:This Systematic Literature Review (SLR) study aims to identify and critically evaluate global empirical evidence on the relationship between various financial performance indicators (liquidity ratio, solvency, efficiency, and profitability) with the level of company profitability and conduct a multidimensional synthesis to map the inconsistencies in the findings and identify contextual factors (sector, geography, methodology) that moderate the relationship.

Method:This study adopted a Systematic Literature Review (SLR) methodology following the PRISMA guidelines. The study population comprised all relevant scientific publications from the Scopus academic database between 2020 and 2025. The study sample consisted of 52 articles selected from empirical studies that met strict inclusion criteria. Multidimensional Qualitative Synthesis and thematic mapping were used as analytical tools to systematically integrate the results.

Finding:The synthesis results show that operational efficiency indicators (Total Asset Turnover) and optimal debt management are the most consistently positive predictors of profitability (Return on Assets/Equity). However, significant inconsistencies were found, particularly regarding the impact of liquidity ratios, which were often negative or insignificant. These inconsistencies are largely due to industry context (different sensitivity in the service vs. manufacturing sectors) and differences in regulatory frameworks across countries, highlighting the need for context-specific interpretation of the results.

Novelty:The main novelty of this research is the application of Multidimensional Synthesis to not only summarize but also explain the root causes of variations and inconsistencies in existing findings in the literature. This research produces a more detailed theoretical framework by explicitly identifying key moderating variables that researchers and practitioners should consider to holistically understand the complexity of the Financial Performance–Profitability relationship.