This paper investigates the dynamic relationship between financial leverage and firm profitability among listed non-financial manufacturing and industrial firms operating in Emerging Asian Markets (EAM). The objective is to resolve widespread empirical contradictions regarding capital structure effects and determine the existence of an optimal leverage ratio specific to this region. The study utilizes dynamic panel data spanning the period 2016–2022. Due to the inherent dynamic persistence of profitability and the potential endogeneity of financing decisions, the Generalized Method of Moments (GMM) estimation technique is employed to control for unobserved firm heterogeneity and estimation bias.1 Key performance indicators include Return on Assets (ROA) and Return on Equity (ROE), measured against the Debt-to-Assets ratio (LEV) and its squared term ($LEV^2$). The empirical results reveal a statistically significant non-linear relationship, specifically an inverted U-shaped curve, between financial leverage and firm profitability. This finding confirms the existence of an optimal leverage threshold, calculated to be approximately 58.7% of total assets for ROA maximization. This result reconciles the benefits of debt (tax shields and enhanced returns at moderate levels) with the escalating costs of financial distress observed in high-debt scenarios.3 The primary implication for EAM firms is the necessity of optimizing, rather than maximizing, debt usage to ensure sustainable financial health and longterm value creation.