The seven common forms in a CMA report

Form	Typical contents	What the bank checks
Form 1: Existing and proposed limits	Existing and requested fund-based and non-fund-based facilities, lender, sanctioned and outstanding amounts, purpose and security.	Whether the requested facility is clear, justified and consistent with existing borrowing.
Form 2: Operating statement	Sales, cost of goods sold, gross profit, operating expenses, EBITDA, interest, depreciation, tax and profit after tax.	Whether revenue, margins and expenses are realistic and supported by past performance.
Form 3: Analysis of balance sheet	Equity, reserves, term debt, current liabilities, fixed assets, inventory, receivables, cash and other assets.	Net worth, leverage, asset quality and whether the balance sheet balances.
Form 4: Current assets and current liabilities	Stock, work in progress, finished goods, receivables, other current assets, creditors and other current liabilities.	Operating-cycle assumptions and the working-capital gap.
Form 5: Maximum Permissible Bank Finance or working-capital assessment	Eligible current assets, current liabilities, borrower margin, working-capital gap and proposed bank finance, where that method applies.	Whether the limit is justified under the lender's chosen assessment method.
Form 6: Funds flow statement	Sources and uses of funds across historical and projected periods.	Whether funds are being used as stated and whether cash needs are adequately funded.
Form 7: Ratio analysis	Liquidity, leverage, profitability, efficiency, debt service and coverage ratios.	Whether the business can operate sustainably and repay the proposed facility.

Banks may rename, combine, split or add schedules to these forms. Always start with the bank's current Excel template and instructions.

How many years should the CMA report cover?

A common format includes two or three historical years, the current year's estimate and two or three projected years. The exact period depends on the bank, the type of facility, the age of the business and the purpose of the application. New businesses may have limited historical data and need a detailed project-based projection. Existing businesses should align the CMA with audited financial statements, tax returns, GST records and management accounts.

Do not label a projection as audited actuals. Mark actual, provisional, estimated and projected years clearly.

The core formulas used in CMA data

Metric	Common formula	How to interpret it
Gross profit	Net sales minus cost of goods sold	Shows the amount available to cover operating expenses, finance cost and tax.
EBITDA	Operating profit before interest, tax, depreciation and amortisation	Indicates operating earnings before financing, tax and non-cash depreciation.
Current ratio	Current assets ÷ current liabilities	Measures short-term liquidity. The lender's minimum, if any, is policy-specific.
Working-capital gap	Eligible current assets minus eligible current liabilities other than bank borrowing, as defined by the lender's method	Shows the funding gap between operating assets and non-bank current liabilities.
Operating cycle, in days	Inventory days + receivable days minus payable days	Approximate time cash is tied up between buying inputs and collecting customer payments.
Inventory days	Average inventory ÷ cost of goods sold × 365	Estimates how long stock remains in the business.
Receivable days	Average trade receivables ÷ credit sales × 365	Estimates the time taken to collect customer invoices.
Payable days	Average trade payables ÷ credit purchases × 365	Estimates the time taken to pay suppliers.
Debt-equity ratio	Total debt ÷ tangible net worth, using the lender's definitions	Measures debt relative to the owners' net worth.
DSCR	Cash available for debt service ÷ total debt service due for the period	Measures the cash available to pay scheduled principal and interest.
Interest coverage	EBIT or the lender-defined earnings measure ÷ interest expense	Measures the ability to pay interest from operating earnings.
Asset turnover	Net sales ÷ average total assets	Indicates how effectively the asset base supports revenue.

DSCR formula for a term loan

A commonly used approach is:

DSCR = Cash flow available for debt service ÷ (principal due during the period + interest due during the period)

The cash-flow numerator may be built from profit after tax, depreciation and other adjustments, or from a lender-defined cash accrual measure. The exact formula varies by bank and the nature of the project. Some lenders calculate yearly DSCR and average DSCR across the repayment period.

Example: if cash available for debt service in a year is ₹18 lakh and scheduled principal plus interest is ₹12 lakh, DSCR is ₹18 lakh ÷ ₹12 lakh = 1.50. This means the model shows ₹1.50 available for each ₹1.00 of scheduled debt service. It does not guarantee sanction.

A DSCR range of 1.50 to 1.85 can be used as a planning reference in some proposals, but it is not a universal RBI-mandated pass range. A lender may use different thresholds based on industry, loan structure, cash-flow risk and policy.

Current ratio: is 1.33:1 mandatory?

No single current ratio applies universally to every commercial bank loan. The 1.33:1 figure is historically associated with a particular working-capital assessment method, but RBI material records that the earlier MPBF prescription based on a minimum current ratio of 1.33:1 was withdrawn for the relevant framework, leaving banks flexibility to set their own approach.

A lower current ratio can raise questions about liquidity, while a very high ratio can indicate idle stock, slow receivables or inefficient working capital. Explain the underlying business cycle rather than manipulating current assets or current liabilities to hit a number.

Nayak Committee working-capital calculation

The Nayak Committee turnover method is commonly explained as working-capital requirement of about 25% of projected annual turnover, with the borrower bringing 5% of turnover as net working capital and the bank financing 20% of turnover, subject to the applicable framework and lender's assessment.

Illustration: if projected annual turnover is ₹2 crore:

Calculation	Amount
Estimated working-capital requirement at 25% of turnover	₹50 lakh
Borrower's 5% contribution	₹10 lakh
ndicative bank finance at 20% of turnover	₹40 lakh

This is a simplified illustration, not an automatic entitlement to a ₹40 lakh limit. Applicability depends on the borrower, facility amount, lender category, current rules and the bank's chosen method. The bank may use a detailed operating-cycle or cash-budget assessment where appropriate.

Operating cycle formula for a bank loan

A practical operating-cycle estimate is:

Operating cycle = Inventory holding period + Receivable collection period − Payable deferral period

For a manufacturing business, inventory holding can be split into raw materials, work in progress and finished goods. For a trader, the model may focus on stock holding and receivable collection. Use average balances where available, and use credit purchases rather than total sales when calculating payable days if that better reflects the lender's format.

Example: raw material and finished goods inventory totals 50 days, customer collection takes 45 days, and suppliers allow 30 days. The net operating cycle is 50 + 45 − 30 = 65 days. This suggests cash may be tied up for about 65 days, but the estimate should be checked against seasonality, production time, customer contracts and actual payment behaviour.

CMA ratio guide: useful benchmarks without false guarantees

Ratio or assumption	How to use it	Common issue to avoid
DSCR	Use the bank's stated minimum and calculate it year by year across the repayment period.	Using one strong year to hide weak repayment years.
Current ratio	Compare against the lender's current credit policy and explain working-capital movements.	Treating 1.33:1 as a universal statutory requirement.
Debt to equity or TOL/TNW	Use the lender's exact definition and reconcile debt with the balance sheet.	Ignoring unsecured loans, related-party balances or contingent obligations.
Inventory days	Base on production lead times, supplier delivery schedules, stock policy and historic turnover.	Showing zero inventory for a manufacturer that must hold inputs or finished goods.
Debtor days	Use actual customer credit terms, ageing and collection history.	Assuming all industrial customers pay immediately without evidence.
Creditor days	Reflect negotiated supplier terms and payment history.	Stretching supplier payments unrealistically to improve cash flow.
Sales growth and margins	Support with capacity, order book, market demand, pricing and costs.	Projecting large sales growth without additional capacity or working capital.

How to prepare a bank-ready CMA report in Excel

Start with the lender's latest template. Do not assume one bank's format will be accepted by another.
Collect audited financial statements, provisional accounts, tax returns, GST data, stock statements and existing loan schedules as applicable.
Separate historical actuals, current-year estimates and future projections with clear labels.
Build assumptions for sales growth, pricing, production capacity, raw-material costs, salaries, utilities, rent, stock days, debtor days and creditor days.
Link the operating statement, balance sheet, working-capital schedule, funds flow and ratio analysis instead of typing the same figure separately in multiple forms.
Check that assets equal liabilities and equity, opening balances reconcile to closing balances, and cash flow agrees with the movement in cash and debt.
Model the proposed loan amount, interest rate, moratorium, repayment schedule and working-capital usage using the lender's assumptions.
Run downside checks for lower sales, delayed customer collections, higher input costs and slower inventory turnover.
Add a note explaining unusual movements, related-party transactions, one-time expenses or significant changes from historical performance.
Reconcile the final report with the application, DPR, quotations and financial records before submission.

Common CMA mistakes that delay or weaken a loan proposal

Projected sales do not match the machinery capacity or service delivery capacity.
Gross margins improve sharply without a commercial explanation.
Balance sheet totals do not reconcile with the operating statement and funds flow.
Loan repayment is not reflected in cash flow, debt balances or DSCR.
Stock, receivable and payable days are copied from a generic template instead of the actual business.
Existing loans, unsecured loans or overdue liabilities are omitted.
The requested working-capital limit has no clear connection to the operating cycle or turnover.
An online ratio target is treated as a mandatory rule even though the bank has its own policy.

Documents typically needed to prepare CMA data

Last two or three years of audited financial statements, if available.
Current-year provisional or estimated financials.
Income tax returns and GST returns, where applicable.
Current bank statements and details of existing facilities.
Stock and debtor statements, ageing reports and creditor details, where applicable.
Details of machinery, capacity, project costs and supplier quotations for a new or expansion project.
Loan repayment schedules, interest terms and proposed facility structure.
Sales assumptions, purchase terms, operating expenses and supporting contracts or orders, where available.

Frequently asked questions

What is CMA data preparation for a bank loan?

It is the preparation of linked historical financial statements, current-year estimates, future projections and banking ratios used to assess working-capital needs, leverage and repayment capacity.

What are the seven CMA forms?

A common format covers existing and proposed credit limits, operating statement, balance-sheet analysis, current assets and liabilities, working-capital or MPBF assessment, funds flow and ratio analysis. Banks may vary the layout.

Is a current ratio of 1.33 mandatory for every bank loan?

No. The required ratio depends on the lender and facility. The 1.33:1 figure is associated with a historic working-capital method and is not a universal rule for every loan.

What is a good DSCR for a term loan?

A DSCR above 1 indicates cash flow exceeds scheduled debt service. Many lenders prefer a cushion above 1, but the required threshold depends on the bank, project risk, loan tenor and repayment structure.

How is DSCR calculated?

A common formula is cash flow available for debt service divided by principal plus interest due during the period. The bank's exact numerator and adjustments should be used.

What is the Nayak Committee method?

It is a turnover-based approach often explained as working capital of 25% of projected annual turnover, with 5% contributed by the borrower and 20% financed by the bank, where applicable.

How do I calculate the operating cycle?

Add inventory holding days and receivable collection days, then subtract payable deferral days. Use business-specific assumptions and average balances where possible.

Can I prepare CMA data in Excel myself?

Yes, if you understand financial statements and the lender's format. For a material loan, have the model reviewed by a qualified accountant or finance professional and reconcile all schedules.

Do all banks use the same CMA format?

No. Seven-form structures are common, but banks can request their own workbook, additional schedules and different projection periods.

Will good CMA ratios guarantee loan approval?

No. Ratios are one part of the appraisal. The lender also assesses credit history, security, industry risk, promoter experience, cash flow, documentation and internal credit policy

CMA Data Preparation for Bank Loans: Formats, Formulas and Key Ratios