Spanning the 2021–2024 period, this quantitative inquiry examines how capital structure impacts corporate performance among manufacturing entities on the Indonesia Stock Exchange, with a specific focus on the potential intervening role of business risk. The investigation responds to ongoing empirical inconsistencies surrounding leverage-performance dynamics and addresses the sparse literature regarding the contingency function of operational risk within developing economies. Utilizing a purposive sampling strategy, the empirical framework evaluates 1,264 distinct firm-year observations through Moderated Regression Analysis (MRA). Capital structure was measured using the Debt-to-Equity Ratio (DER), firm performance was represented by Return on Assets (ROA), and business risk was reflected by operating cash flow volatility. The findings reveal that higher leverage negatively affects firm performance, indicating that excessive dependence on debt financing may weaken profitability due to increased financial commitments and potential financial distress. Nevertheless, business risk was not found to significantly alter the association between capital structure and firm performance. These results imply that the impact of leverage on corporate performance operates independently of business risk conditions. The study enriches the financial management literature by providing evidence from Indonesian manufacturing companies and offers practical insights for managers in formulating financing decisions.