The Role of Financial Structure in Enhancing Financial Performance According to the DuPont Model

This study aims to examine the impact of the financial structure on financial performance using the five-component DuPont model for industrial companies listed on the Iraq Stock Exchange, with the Bursa of Amman serving as a comparative case. The research population consists of industrial joint-stock companies listed on the Iraq Stock Exchange and the Bursa of Amman. The study sample includes ten (10) Iraqi industrial companies and ten (10) Jordanian industrial companies drawn from the population. The research relies on financial data for panel time series using EViews 13 as the statistical analysis tool. For descriptive purposes, the study employs measures of central tendency and dispersion—specifically the arithmetic mean and standard deviation—to describe the study variables. The findings indicate the presence of statistically significant effects of financial structure indicators across various measures of financial performance. In particular, short-term debt, long-term debt, equity, and the debt-to-equity ratio contribute to explaining variations in operating profit margin, asset utilization efficiency, financial leverage, tax burden, and interest burden. The results further show that increases in short-term debt negatively affect operating profitability. Conversely, long-term debt and equity contribute to improving financial performance and enhancing stability. Additionally, the study reveals that all financial structure indicators positively affect asset turnover efficiency, with long-term debt demonstrating the strongest influence in this regard. The findings also indicate that greater reliance on debt increases financial leverage, tax burden, and interest burden. In contrast, higher equity reduces financial leverage, increases tax burden, and decreases interest burden. Based on these results, the study recommends achieving a balanced financial structure, reducing excessive reliance on short-term debt, and promoting the use of long-term debt in a deliberate and well-planned manner, alongside improving asset management efficiency. The study also calls for strengthening equity financing, developing debt management policies, and periodically reviewing the funding mix to control costs and financial risks. Finally, the recommendations emphasize the importance of strengthening internal corporate policies and improving firms’ efficiency in utilizing resources to ensure sustainability and maximize market value.