Why CMA Data is required
CMA gives a financial blueprint of a company performance year-on-year. The overall financial health, eligibility
for loan, repayment capacity, etc., can be determined with the use of CMA data. A properly planned and well
drafted CMA Data is sufficient to establish eligibility for loan.
Key Aspects for Drafting CMA Data
- All assumptions and estimates used in preparation of CMA should be mentioned separately
- Future projections should be realistic and not merely arithmetic multiples of current performance
- Fluctuations in performance should be strongly justifiable
- All fixed assets, depreciation and loan repayment schedules should be annexed and linked to CMA Data
- Past performance and actual numbers should be exactly as per Audited Financials
- The company should be able to justify the performance and numbers projected
- In case of multiple businesses activity or locations, detailed annexure should be attached showing breakup of how the projected numbers are arrived at
- CMA Data should represent a viable business performance - over borrowing is unfavourable and cannot be justified through financial ratios
It is important to note that even though a CMA Data is a very detailed analysis of the Profit and Loss statement
and balance sheet of a company, there are only a handful of ratios and indicators on which loan eligibility is
decided.
The key to preparing a good CMA Data is to present a healthy financial projection, but and at the same time -
to communicate that funds are needed for expansion. Hence a perfect balance needs to be achieved and
explained through the CMA Data - that the company is healthy enough to repay the loan but not so much that
it can expand without availing the loan.