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What Is A CMA Report PDF

A CMA report provides a systematic analysis of a loan applicant's working capital management and financial position. It contains several key statements and analyses, including: 1) Details of existing and proposed credit limits, operating statements with current and projected profits/losses, and balance sheet analyses with current and projected asset/liability positions. 2) Comparative analyses of current assets and liabilities to determine the actual working capital cycle. 3) Calculation of the Maximum Permissible Bank Finance, which determines the working capital gap and permissible financing. 4) A fund flow statement analyzing the applicant's fund position over the projected period. 5) Key financial ratios derived from the CMA data to assess the applicant

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728 views

What Is A CMA Report PDF

A CMA report provides a systematic analysis of a loan applicant's working capital management and financial position. It contains several key statements and analyses, including: 1) Details of existing and proposed credit limits, operating statements with current and projected profits/losses, and balance sheet analyses with current and projected asset/liability positions. 2) Comparative analyses of current assets and liabilities to determine the actual working capital cycle. 3) Calculation of the Maximum Permissible Bank Finance, which determines the working capital gap and permissible financing. 4) A fund flow statement analyzing the applicant's fund position over the projected period. 5) Key financial ratios derived from the CMA data to assess the applicant

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What is a CMA Report?

Credit Monitoring Arrangement (CMA) data is a very important area to be understood by a person
dealing with finance in an organization. It is the critical analysis of the current & projected financial
statements of a loan applicant by a banker. It is a systematic analysis of working capital
management of a borrower and the objective of this statement is to ensure that the long term &
short term funds have been used for the given purpose.

The basic contents of the CMA data are as follows:

Particulars of Existing & proposed limits:

This is the first statement in the CMA data which contains the present fund & non fund based credit
limits of the borrower, their usage limits and history. Along with the present fund limits, the
proposed or applied limits of the borrower will be mentioned in this statement.

Operating Statement:

This is the second statement which is provided by the borrower. This statement has the current as
well as the projected P&L of the borrower which will include his Current sales, expenses & profits &
projected sales, projected expenses & profits for a 3-5 year period based on the borrower’s working
capital request. This statement analyses the current & projected profit generating capacity of the
borrower.

Analysis of Balance Sheet:

The third statement is the Balance sheet analysis. This statement gives the detailed analysis of the
current & non-current assets, fixed assets, cash & bank position and current & non-current liabilities
of the borrower. Also this statement indicates the net worth position of the borrower for the
projected years. Balance sheet analysis gives a complete financial position of the borrower and the
cash generating capacity during the projected years.

Comparative Statement of Current Assets & Liabilities:

This statement gives the comparative analysis of current assets & current liabilities movement of the
borrower. This sheet helps in deciding the actual working capital cycle for the projected period and
the capacity of the borrower to meet their working capital requirements.

Calculation of MPBF:

This is a very important statement and calculation, which indicates the Maximum Permissible Bank
Finance. This statement calculates the borrower working capital gap and the permissible finance in
two lending methods.

Fund Flow Statement:

This statement analyses the borrower fund position with reference to the working capital analysis
given in MPBF calculations & projected balance sheets. Basic objective of this statement is to
capture the funds movement of the borrower for the given period.

Ratio Analysis:

This statement gives the key ratios to the banker based on the CMA data prepared. Basic key ratios
are Gross Profit ratio, Net profit ratio, Current ratio, Net worth, Debt/Equity ratio, etc.

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