CMA report is also known as Credit Monitoring Arrangement report. This is also the expanded form of the CMA. It is a report that shows the projected performance and the past performance of a business in financial terms.
What is CMA Report In Finance
CMA report is also known as Credit Monitoring Arrangement report. This is also the expanded form of the CMA. It is a report that shows the projected performance and the past performance of a business in financial terms.
It is compiled with all the required financial ratios and metrics to help Financial Analysts and Bankers to ascertain the financial health of a business. Most of the Banking and Financial Institution request the applicant to prepare a CMA report to understand the flow and application of funds in a business. A professionally prepared CMA report can enhance the chances to obtain a bank loan.
The following are the points of the CMA report, which should include all the information.
- Information about your current financial condition, borrowed fund and proposed fund are covered. If the business is new, proposed data is required to be given.
- Operating statement: You are required to show the past 2 years and future 3 years' operating statements. All profit and loss accounts should be mentioned.
- Analysis of balance sheet: Details about your balance sheets of past years and the proposed balance sheet data to show a picture of your future business plan. Details about current assets, fixed assets, current and long-term liabilities are presented in this statement.
- Calculation of MPBF: Calculation of maximum permissible bank finance. It shows the capacity of the borrower to borrow money. It depends on two methods which are dependent on working capital.
- Fund flow statements: This statement shows the fund flow statements for current and future years. It shows the fund utilization and sources of funds. The statement is important because it highlights the utilization of funds.
- Ratio analysis: This is one of the important statements of CMA 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.
