Welcome to Ahuja & Ahuja Chartered Accountants, your trusted partner for all your financial and accounting needs. Our firm is led by expert and experienced Chartered Accountants with over two decades of industry experience, and we serve clients in NCR region of New Delhi, Noida, Gurugram (Gurgaon), and Greater Noida. In this service page, we will discuss our CMA Data Preparation services.
What Is CMA Data Preparation?
CMA Data Preparation is an important process that businesses need to follow to obtain a Credit Monitoring Arrangement Report (CMA Report) required by banks for getting Cash Credit (CC) or Overdraft (OD). Banks require this report to assess the financial health of their prospective borrowers and judge their repayment capacity. The report is also required for applying to increase the current credit limit.
Our team of CMA Data Preparation specialists understands the importance of preparing a comprehensive and accurate report for our clients.
We follow a structured process that includes the following documents:
- Last two years of Audited financial statements
- Current year’s Provisional financial statement
- Next two years of Projected financial statements 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
We also include 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 they indicate 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.
Our CMA Data Preparation specialists prepare the report with utmost precision and follow the bank’s set formats, which vary from case to case. 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 and project report are both important documents for lenders and investors to evaluate a borrower’s creditworthiness and business viability. However, they serve different purposes and contain different information.
CMA (Credit Monitoring Arrangement) data is a financial statement that provides detailed information on the borrower’s past and current financial performance, including income statements, balance sheets, cash flow statements, and other financial data. The purpose of CMA data is to help lenders assess the borrower’s financial health, repayment capacity, and risk profile. It is a quantitative analysis of the borrower’s financials and does not provide any qualitative analysis of the business or the project.
On the other hand, a project report is a comprehensive document that outlines the details of a business project or proposal. It includes information about the project’s objectives, scope, feasibility, market analysis, marketing strategy, operational plan, financial projections, and risk assessment. The purpose of a project report is to provide an overview of the project’s viability, profitability, and potential risks and benefits. It is a qualitative analysis of the project’s feasibility and does not provide detailed financial data like CMA data.
In summary, while both CMA data and project report are essential documents for lenders and investors, CMA data is a quantitative analysis of the borrower’s financials, whereas a project report is a qualitative analysis of the project’s feasibility and potential.
At Ahuja & Ahuja Chartered Accountants, we understand that CMA Data Preparation is a complex and time-consuming process that requires expertise and precision. Our team of specialists has years of experience in preparing CMA reports for clients across various industries. We offer our services at reasonable CMA Data Preparation charges, and we guarantee timely delivery of accurate reports that meet the bank’s requirements.
Contact us today to know more about our CMA Data Preparation services, and how we can help you obtain the CMA report required for your business to grow and prosper.
FAQs
What are the contents of a typical CMA Data report?
A typical CMA Data report contains various financial statements and ratios such as balance sheets, profit and loss statements, cash flow statements, projected financial statements, ratio analysis, and fund flow statements. These statements help the bank assess the creditworthiness of the borrower and the ability of the business to repay the loan.
Is it necessary to update the CMA Data report regularly?
Yes, it is recommended to update the CMA Data report regularly, especially if there are significant changes in the business’s financial standing. This helps the bank assess the current financial position of the borrower and make informed lending decisions.
What is the importance of CMA Data in credit appraisal?
CMA Data is an essential part of the credit appraisal process as it helps banks and financial institutions assess the borrower’s financial health and repayment capacity. It provides a comprehensive picture of the borrower’s financial position, including their cash flows, profitability, and liquidity.
Who prepares the CMA Data report?
The CMA Data report is typically prepared by the borrower or their authorized representative, such as a Chartered Accountant or a Company Secretary. However, the accuracy and reliability of the report can be increased by getting it prepared by a professional.
What are the common mistakes to avoid in CMA Data preparation?
Some common mistakes to avoid while preparing the CMA Data report include incorrect data entry, incomplete financial statements, missing or outdated documents, and inaccurate projections. It is essential to ensure that the report is error-free and includes all relevant financial information to avoid any delays or rejection of the loan application.
What is the difference between CMA Data and a project report?
While CMA Data report provides a comprehensive financial analysis of the borrower’s financial position, a project report focuses on a specific project’s feasibility and viability. A project report includes details such as project cost, funding requirements, expected returns, and market analysis, while a CMA Data report focuses on the borrower’s overall financial health.