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How does profitability help in management decision making

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How does profitability help in management decision making? Why is the ratio of debt/equity so important to banks/bankers before issuing a loan?

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The solution discusses how profitability helps management decision making. The ratio of debt/equity for banks/bankers are discussed.

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Profitability tells about the efficiency of the organization. If the company is into losses then the organization's resources are not efficiently utilized. Hence it helps the management to take decisions for improvement in utilization of the resources.

Why is the ratio of debt/equity so important to banks/bankers before issuing a loan?

Debt-to-Equity Ratio. ...

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