What is CMA (Credit Monitoring Arrangement) report in finance
What is CMA (Credit Monitoring Arrangement) report in finance
CMA (Credit Monitoring Arrangement) reports have a crucial role although RBI (Reserve Bank of India) suggests not to only rely on CMA data for granting loans. All banks still ask for the what is CMA (credit monitoring arrangement) report in finance report whether it is a small loan like 4 lakhs to 6 lakhs. To understand the flow of funds of borrowers and viability of projects. The CMA report contains the following elements.
Details of existing and proposed fund limits: Your current financial condition, borrowed fund and proposed fund should be covered. If the business is new, a project report is needed.
Operating statement: In this statement, past 2 years, and future 3 years (Proposed) operating statements are required. There may be some changes as per loan needed and business nature. The profit and loss account should be presented.
Analysis of balance sheet: Details about your balance sheets of past years are required. The proposed balance sheet data is also required to show a perspective of your future business plan. Details about your current assets, fixed assets, current and long-term liabilities are presented in this statement.
Comparative statements of current assets and liabilities: the viability of your working capital cycle.
Calculation of MPBF: Calculation of maximum permissible bank finance shows the capacity of the borrower to borrow money.
Fund flow statements: This statement shows the fund flow statements for current and future years. It shows the fund utilization and sources of funds. It highlights the utilization of funds. Ensure the bank that from you are getting funds for the purpose you have borrowed.
Ratio analysis: This is also one of the long and important statements of cma report data. It covers key ratios. Some ratios are the current ratio, MPBF (Maximum Permissible Bank Finance), Net worth ratio, quick ratios, turnover ratios, debt-equity ratios, DSCR etc.
