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CMA Data Preparation

CMA Report stands for Credit Monitoring Arrangement Report, a report prepared for banks. Businesses are growing rapidly, and banks contribute sizably to this growth. Not everyone has ancestral money, and not every business can fund its expansion through retained earnings. A business needs funding, either by way of equity or debt, at one point or another. To finance a business via creating a debt, getting a loan sanctioned from a bank is a good option if the interest rates are lower than in any other option. CMA Report is must for getting the Cash Credit (CC)/Overdraft (OD) from the banks.
Banks prefer to give loans to those clients who have good financial standing. And before sanctioning a loan, they want to assess the financial health of their prospective borrowers. This is when the need for this comprehensive report arises. Banks demand this report to judge the repayment capacity of its borrower. This report is also required to apply for an increase in the current credit limit. The data used in this report is based majorly on the client's financial statements. 
Having discussed the need for CMA Report, let's discuss the documents required for this data's preparation and how CMA data is prepared. Generally, it contains-
* A total of 5 years of comparative financial statements, for-

1: Last two years (Audited)

2: Current year (Provisional)

3: Next two years (Projected) along with explanations for assumptions taken

* Income Tax Returns of business

* Income Tax Return of owners of the business

* Cost sheet of expenses

* Latest loan sanction letter if applying for renewing or increasing the current limit

* Fund Flow Statement

* Ratio analysis report based on the financials

* Maximum Permissible Bank Finance Report
It also includes general information about the borrowers, SWOT analysis of the project, the company's standing in the business industry, need for funds and plans for utilization of funds. If the project is new, then a detailed report is also given.
Projected financial statements hold great significance as it indicates the future growth of the business, and the repayment of loan depends mainly on the future income. These statements have to be made by keeping in mind all the factors affecting business, whether financial or non-financial. 
The loan sanctioning depends significantly on the data presented in this report. So, it should be prepared with utmost precision. There is no specific CMA Data Preparation Format for it as it depends from case to case. Usually, banks have their own set formats.  
The ratio analysis statement is the most crucial part of this CMA data preparation. Bankers compare the ratios talked about in the report with the standards they have set. If the ratios meet their set ideal criteria, they sanction the loan; otherwise, they reject it. This analysis also helps them to calculate the loan limit. Ratios include Gross Profit Ratios, Net Profit Ratios, Turnover ratios, Current and Quick ratio, Debt- equity ratio, etc. 

Difference between CMA Data and Project Report

CMA Data Project Report
It mainly focuses on determining the borrowing capacity of an entity. It mainly focuses on determining the viability of a project, i.e., its ability to work successfully.
Factors affecting CMA Data include time complexity, inappropriate analysis, fund-related issues, complex paperwork, etc. Factors affecting project reports include time complexity, difficulty in understanding the project, improper risk management, etc.
Its benefits include effective use of funds, analysis of both current and non-current assets, liabilities, determining financial position, etc. Its benefits include identifying risks, cost management, increased project control, increased chances of project success, etc.
Its main objective is to provide a financial blueprint of the performance of an entity and ensure that funds are used effectively. Its main objective is to track the current progress of the project and then compare it with the original plan so that the inefficiencies can be identified and corrective action can be taken.
It includes information such as operation statement, ratio analysis, comparative statement of current assets and current liabilities, fund flow statement, etc. It includes information relating to the manufacturing process, power and water requirements, the need for human resources, machinery and equipment, prices and specifications, etc., regarding the project.
It is generally submitted to bankers by an organization or company. It is generally submitted to bankers, venture capitalists, PE investors, or anyone investing in the project.
It is more difficult to understand and analyse than a project report. It is easier to understand and handle than CMA data.
Preparing CMA Datareport is a very complicated and time-consuming task. It is highly advised to outsource this job to experienced professionals, as in this case, one cannot afford any mistakes. We at MAG provide the services of preparation of CMA Data Reports and are the best among the CMA Data Consultants in Delhi. Also, a professional who is proficient in making these reports knows about this report preparation inside out, and it increases the odds of a loan getting approved.

For the services of CMA Data preparation, you can reach us at Our team of experts aims to provide you with the most accurate and presentable CMA Data reports.

Frequently Asked Questions

No, there is no fixed format available for CMA Data preparation. But, generally, the contents of the report remain fixed.  
An entity prepares CMA Data to present it to the bank for many purposes like raising a loan, meeting working capital requirements or increasing the cash credit limit.
Most banks and financial institutions mandatorily require CMA Data Report from the  borrowers before lending. 
No, there is no such statutory requirement to get the CMA Data prepared or certified by a professional. But banks and financial institutions prefer that the data is prepared by professionals as it increases the authenticity of the report. 
CMA Data Report helps bankers assess the borrowing capacity of the borrower before sanctioning a loan. Based on the data presented in the CMA Report, they analyse the financial standing of the business and the chances of default in the repayment. 
A CMA report is important for businesses as it helps in assessing their creditworthiness and determining their borrowing capacity from banks.
An organization or company typically submits a CMA report to bankers.
The purpose of the SWOT analysis in a CMA report is to evaluate the strengths, weaknesses, opportunities, and threats of the project or business.
A CMA report is required to be updated annually or whenever there is a significant change in the borrower's financial situation.
A CMA report analyzes the financial health and viability of a business, while a business plan outlines the company's goals, strategies, and operational details.
DSCR, or Debt Service Coverage Ratio, in CMA data measures the borrower's ability to repay debt by comparing their net operating income to debt obligations.
The formula for Debt Service Coverage Ratio (DSCR) is the total debt obligations divided by the borrower's income, expressed as a percentage.
CMA data is required by lenders to evaluate the financial position, creditworthiness, and repayment capacity of borrowers before making lending decisions.
The benefits of a CMA report include evaluating creditworthiness, analyzing financial health, and aiding informed lending decisions through comprehensive financial assessment.
The data required for a CMA report typically include financial statements, income details, cash flow statements, and supporting documents related to the borrower's financial position.

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