Abstract: This study examines the impact of short-term debt on the financial performance of manufacturing companies listed on the Ghana Stock Exchange over an eight-year period (2015–2023). Using a combination of descriptive and causal research designs, the study utilizes secondary data from audited financial statements to investigate the relationship between short-term debt and firm performance, measured through Return on Assets (ROA). The findings reveal a significant but negative correlation between short-term debt and ROA, indicating that higher reliance on short-term financing may adversely affect profitability. Conversely, firm size demonstrates a positive but weak association with performance. Regression analysis confirms that short-term debt and firm size account for 9.9% of the variations in financial performance, highlighting the limited but impactful role of short-term debt in the capital structure. The study shows the need for manufacturing firms to optimize their financing strategies by prioritizing internal funds before resorting to external short-term debt. Recommendations include exploring alternative investment options, diversifying funding sources, and conducting similar studies across other sectors to validate these findings. This research contributes to the ongoing discourse on capital structure management in developing economies, providing insights for policymakers, investors, and corporate managers.

short-term debt, financial performance, manufacturing firms, capital structure, Ghana Stock Exchange, Return on Assets (ROA)

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