CMA Report Preparation Services - eAuditor

List of Documents / Information Required For Preparing CMA REport:

Details Required

  • Audited Financials of last 2 years.
  • Provisional Financial of the ongoing year; in case of unavailability of provisional financials, the top line particulars will be considered as important.
  • Latest Sanction letter (in case of renewal)
  • Term Loan Repayment Schedule, if any
  • If the company proposed any enhancement then details of enhancement along with terms and conditions are required.
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CMA Report: A brief

A Credit Monitoring Arrangement report also abbreviated as CMA report is an important document in the form of a report which indicates the projected financial performance and the past financial performance of a business.  

The concept of CMA was originated from major recommendations of the Tandon Committee, in 1974 by working capital finance and vigilance over the use of bank credit for different sectors. Currently, Reserve bank of India regulations is followed. 

CMA report is a part of essential documents that a business should own for providing the user a quick and overall assessment about the concern. The users of CMA can perceive the financial health of the organisation from it. 

CMA reports are usually prepared for banks in the process of loan application and sanction. With CMA reports banks assess the genuine usage of capital and funds of the organisation and the resultant growth, which is necessary to ensure the repayment capability of the organisation. 

Thus, denoting CMA report as one of the important criteria of loan approval or rejection would not be an overstatement. 

Different Types of Bank Loan Facilities 

  • Term Loan 

A term loan is sanctioned by Banks for specific purposes like acquiring fixed assets, such as land, building, equipment, and other long-term assets. Repayment is fixed over 5 years or more with EMI payments or bullet payments (lumpsum repayment). 

  • Working Capital 

The working capital loan is sanctioned by Banks for operational purposes like holding inventory, receivables, and acquiring some other current assets in a business. Working capital facilities are renewable every year. 

  • Letter of Credit 

A Letter of credit is a type of facility from a Bank which guarantees a buyer's payment to a seller, in the event of failure of repayment from the buyer’s side. 

  • Bank Guarantee 

A Bank guarantee is a promise from a bank that the liabilities of a person will be met by the Bank if the person fails to fulfil contractual obligations. These are requested while executing large and heavy financial projects. 

  • Mortgage Loan 

A Mortgage loan is a loan that is backed by the real property by putting a lien on the property being mortgaged. The funds generated from a mortgage loan can be used by the business for any purpose. 

Under the prevailing rules, the Reserve Bank of India has mandated all banks to prepare CMA for lending to large borrowers. Hence, CMA data is required for project loans, term loans, and working capital limits. 

The statement covered in CMA Report: 

  • Particulars of Current & Proposed limits –  

The borrower must supply this to the bank, as it clarifies the credit limits of the business under which it operates and also a history of credit usage. 

  • Operating statements - The Operating statements comprise the sales, profits, sale projections, expenses, etc, to get a review of the existing as well as the projected profit-generating ability of the borrower. 

  • Analysis of Balance Sheet - This statement provides a wholesome picture of the borrower's financial position, in context with the past and the future projections. 

  • Comparative Statements of the Current Assets as well as the Current Liabilities – This is an important document that differentiates the current assets and the liabilities which aid in the calculation of the actual working capital cycle for the projected period. 

  • Calculation of Maximum Permissible Bank Finance (MPBF) - This statement indicates the limits on the borrower’s capacity to borrow money. 

  • Fund Flow Statement - In simultaneous view, the MPBF as well as the projected balance sheets, the fund flow statement is used to capture the movement that is inward and outward flows of the funds. 

  • Ratio Analysis - Technical ratios which apply to the undertaking to get a brief financial analysis about the health of the business gets mentioned here. 

Documents required for CMA are as follows:

  1. Income Tax Returns filed by the entity and the owner. 

  2.  Last 2 years Audited Financial Statements of the entity. 

  3. Provisional Financial statement of the year for which CMA Data is being prepared. 

  4. Notes and instructions, if any about the assumptions to be used while preparing Projected Financial statements. 

  5.  Cost sheet of Direct and Indirect expenses.   

The format of CMA Data generally contains preceding two years actual performance, estimated figures of the ongoing year, and next five years projections and details of: 

  • Profit and Loss Account 

  • Cash Flow Statement 

  • Ratio Analysis 

  • Balance Sheet 

  • Fund Flow Statement 

  • Analysis of Maximum Permissible Bank Finance

Choosing eAuditor Office for preparing CMA Report

For preparing a viable and good CMA data report online, we need to understand your business. Our team of eAuditor will get in touch with you for the same. It will take into consideration all the peculiarities of your business. CMA report preparation charges would also be informed to you on our website. 

Based on the understanding of your business, our professional member will take charge to ascertain your sales growth, expenses projections, cash inflow and outflows, your assets and liabilities estimations. This will help in picturing the actual and future position of your business. 

eAuditor team and professionals will then discuss to draft CMA and provide you with the CMA report in pdf format. And then final copy of the CMA report will be ready for submission to your bank. eAuditor will help you in CMA Report Preparation easily from your office, offering you services that are specialized for each individual and their business. 

FAQs about CMA Report

You would need a professionally drafted CMA report for all loans that you apply for with the banks. It is a format mandated by the Reserve Bank of India. It is adopted by all nationalized, cooperative banks and private sector banks in India.? No working capital loans can be sanctioned without an appropriately drafted CMA report.

A typical CMA report includes a detailed Ratio analysis of your business. Financial Ratios are quick indicators of your business’s health. Major Ratios includes Current Ratio, Sales turnover Ratio, Stock Turnover Ratios, Debtor and Supplier working cycles Ratio.

Yes, you can easily get the sample of CMA reports which are submitted to banks for granting the loans.

No, CMA reports just illustrate the viability of a business to grow and repay the loan. Whereas audits are statutory compliance of businesses.

Working capital is the fund that is required to run your routine operations of a business.

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