01
Operating Statement
A detailed statement of sales, operating income, direct expenses, indirect expenses, and profitability for past, estimated, and projected periods.
CMA Report Preparation
Prepare Bank-ReadyCMA Reports and CMA Data
CMA, or Credit Monitoring Arrangement, is a structured financial format used by banks to evaluate a business seeking working capital finance.
The report presents revenue, expenses, assets, liabilities, current performance, estimates, projections, and the proposed use of short-term and long-term funds.
1.33+
The current ratio should generally be greater than 1.33.
4–5× Sales
Sales are generally expected to be four or five times the loan amount.
MPBF
Calculation of Maximum Permissible Bank Finance.
Ratio Analysis
Evaluation of liquidity, efficiency, and repayment capacity.
Bank Finance Assessment
Financial analysis, projections, and working capital evaluation.
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What Is a CMA Report?
A Critical Financial Evaluation forWorking Capital Finance
A CMA Report is a banker's critical evaluation of a loan applicant's current and projected financial statements. Applicants provide information about revenue, expenses, assets, liabilities, and obligations in the bank's required format.
CMA data systematically studies the borrower's working capital management. It helps the bank determine whether short-term and long-term funds are being requested and used for their intended purposes.
What Is Included in a CMA Report?
Important Financial Factors Used forBank Loan Assessment
Banks review liquidity, sales, available stock, existing loans, receivables, collection periods, and the applicant's capacity to repay the proposed facility.
01
Current Ratio
The current ratio should generally be greater than 1.33 to indicate an acceptable level of short-term financial strength.
02
Sales and Loan Amount
The projected or existing sales should generally be four or five times the amount of the proposed loan.
03
Stock as Collateral
The business should maintain sufficient stock that can support or act as collateral for the requested loan amount.
04
Existing Loan Details
When the applicant already has another loan, the bank may require complete information about the status, balance, repayment, and terms of that loan.
05
Loan Repayment Capacity
Repayment capacity is evaluated using cash and bank balances, debtors, the collection period, working capital assets, and other relevant financial ratios.
Information Contained in CMA Reports
Financial Statements Prepared forCredit Monitoring and Appraisal
The applicant generally submits an audited Profit and Loss Account and balance sheet for at least one year, estimates for the current year, projections for the next two years, a fund flow statement, ratio analysis, a comparison of current assets and current liabilities, and a statement showing the maximum amount of bank finance permitted.
The number of years for which data is required may differ from one bank to another. Updated CMA data may also need to be submitted periodically even after the finance facility has been sanctioned.
02
Analysis of Balance Sheet
A structured analysis of assets, liabilities, capital, borrowings, reserves, and the overall financial position of the applicant.
03
Current Assets and Liabilities
A comparative statement showing current assets and current liabilities to assess working capital requirements and liquidity.
04
Calculation of MPBF
Calculation of Maximum Permissible Bank Finance to determine the eligible level of working capital funding that may be provided by the bank.
05
Fund Flow Statement
A statement explaining the movement of funds and how short-term and long-term funds are generated and used by the business.
06
Ratio Analysis
Financial ratios are calculated to evaluate liquidity, profitability, solvency, efficiency, collection performance, and repayment capability.
Documents – Main and Legal Documents
Documents Required forCMA Report Preparation
Financial records, projected statements, loan details, and relevant business legal documents are organised according to the bank's CMA format.
01
Audited Profit and Loss Account
The applicant should provide an audited Profit and Loss Account for at least the previous financial year, or for the period requested by the bank.
02
Audited Balance Sheet
An audited balance sheet showing the applicant's assets, liabilities, capital, reserves, and borrowings is required for financial assessment.
03
Current-Year Estimates
Estimated financial statements for the current year must be prepared based on actual performance, expected sales, expenses, and working capital needs.
04
Financial Projections
Projected financial statements are generally prepared for the next two years, although the number of years may vary according to the bank's requirements.
05
Existing Loan Statements
Statements and repayment details of existing loans, credit facilities, outstanding balances, and banking arrangements may be required.
06
Main Legal Documents
Business registration documents, PAN, GST records, ownership or partnership documents, bank statements, and other legal documents requested by the bank should be submitted.
CMA Report Support
Structured Financial Data forBank Submission
- ✓Current and projected financial performance
- ✓Working capital requirement assessment
- ✓Maximum Permissible Bank Finance calculation
- ✓Fund utilisation and repayment capacity
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