CMA Report Preparation

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CMA Report Preparation

This full form of CMA means (Credit Monitoring Arrangements) is given by reserve bank of India for arranging working capital finance, information about income, expenses, assets and liabilities is required to be given in a specific format to the bank by applicant. This specific format is referred to as CMA Report/ CMA Data.

It is a critical analysis of current and projected financial statements of a loan applicant by the banker. CMA data is a systematic analysis of working capital management of a borrower and objective of this statement is to ensure the usage of long term and short term fund have been used for the given purpose.

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

Audited P&L A/c & Balance sheet of at least 1 year, estimates of current year & projections of next at least 2 years are provided to the bank by the applicant along with funds flow statement, Ratio analysis, Comparative statement of current assets & Current liabilities, statement of maximum permissible bank finance number of years for which data is required may vary from bank to bank. Even after getting the finance such data is required to be submitted to the bank periodically.

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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