CMA Data stands for Credit Monitoring Arrangement Data. According to RBI, CMA data is required for Project Loans, Term Loans and Working Capital Limits. As per the regulation, company is required to provide CMA Data getting the loan from bank and every year. CMA Data is a detailed analysis of working capital management of the borrower and the purpose of this statement is to ensure the use of funds effectively.
CMA Data contains 7 statements which help bankers in the evaluation:
1. Particulars about the present limits & proposed limits. It will show both Fund and Non-fund based limits of the borrower.
2. Operating Statement / Profit and loss account statement, the bank will evaluate the performance of a company. It is also helpful to know revenue cycle for paying the expenses.
3. The balance sheet will show the financial position of the company. Is it sound or not? Does company have assets on debt or owned. So, to study balance sheet is the must. CMA Data will have 2 years Audited balance sheet and 3 years projected balance sheet.
4. Cash flow statement, banks will be able to evaluate the liquidity of the company.
5. Changes in working capital report – This report helps in understanding the changes in current assets and current liabilities. It will also helpful to know short term solvency of the company. If it has enough money to pay current liabilities, it cannot misuse its long-term resources.
6. Ratio analysis is presented to the banks.
7. Banks ask the maximum permissible bank finance (MPBF) working. That is – The amount company is looking out for borrowing from a bank? It should not more than 75% of the working capital or 20% of Sales.
DOCUMENTS/INFORMATION REQUIRED TO PREPARE CMA:
1. Past 2 years Audited Financials
2. Provisional Financial for the current year; in the absence of provisional financials, details of the top line shall be essential
3. Latest Sanction letter (in case of renewal)
4. Term Loan Repayment Schedule, if any
5. Details of proposed enhancement (if any) along with the terms and conditions.