CMA Report Preparation

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CMA Report Preparation

The Reserve Bank of India provides working capital financing through CMAs, or credit monitoring arrangements. Applicants must provide the bank with information about their revenue, expenses, assets, and obligations in a particular format. CMA Report/CMA Data is the name given to this particular format.

It is a banker's critical evaluation of a loan applicant's projected and current financial statements. The goal of this statement, which uses CMA data—a systematic study of a borrower's working capital management—is to guarantee that both short- and long-term funds are being used for their intended purposes.

What include in CMA Report?

  • The current ratio should be at least greater than 1.33
  • The sales should be generally 4 or 5 times of the amount of loan
  • There should be sufficient stock to act as collaterally to the loan amount
  • In case, there is another loan, the bank requires the states of the loan.
  • The loan payback capacity of the firm identified by the cash and bank balance, debtors, collection period etc various ratios are to be computed related to working capital assets.

CMA Reports contains Following Information

The applicant provides the bank with an audited P&L A/C and balance sheet of at least one year, estimates for the current year and projections for the next two years, a funds flow statement, a ratio analysis, a comparative statement of current assets and current liabilities, and a statement of the maximum amount of bank financing that is permitted. The number of years for which data is needed varies depending on the bank. Such data must be periodically submitted to the bank even after receiving financing.

Following Statements

  • Operating statement
  • Analysis of Balance sheet
  • Comparative statement of current assets and liabilities
  • Calculation of MPBF ( Maximum permissible Bank finance)
  • Fund flow statement
  • Ratio Analysis

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