Abstract: With the rapid development of global digital economy, digital transformation is gradually becoming an important driving force for enterprises to break through the bottleneck of development and realize value transition. This paper selects the data of A-share manufacturing listed companies from 2013 to 2023, and uses empirical analysis methods to explore the impact of digital transformation of small and medium-sized manufacturing enterprises on financial performance and its mechanism. The results show that digital transformation has a significant positive impact on the financial performance of small and medium-sized manufacturing enterprises; Further mechanism test shows that financing cost plays a part of intermediary effect, and digital transformation can effectively promote the financial performance of small and medium-sized manufacturing enterprises by reducing financing cost; Heterogeneity analysis shows that the improvement of financial performance of small and medium-sized manufacturing enterprises by digital transformation is mainly reflected in capital-intensive enterprises and enterprises in southern China. Finally, according to the conclusions of the study, some countermeasures and suggestions are put forward, aiming at providing useful reference for the digital transformation practice of small and medium-sized manufacturing enterprises.