The Credit Monitoring Arrangement(CMA) reports are prepared in formats as prescribed by RBI. The report consists of historical and projected financial information, Financial and ratio analysis. Since the projections are based on estimates and assumptions, the reasonableness of the same acts as a key element to a well drafted CMA report.

CMA data is required to be submitted to banks for funding working capital (Cash credit, Bank overdraft, Working Capital Terms Loan etc.) needs of a business. Well prepared CMA document can help in negotiating higher working capital limits and lower interest rates.

CMA report consists of financial ratios such as Short term solvency ratios ( Current ratio, Liquid ratio and absolute liquid ratio), Long term solvency ratios (Debt- Equity ratio, Net worth to total asset ratio, Debt to net worth ratio, Capital gearing ratio, Fixed assets to long term funds, Propriety ratio, Interest Coverage ratio, Debt Service coverage ratio), Profitability ratios ( Return on investment, GP margins, EBITDA Margins etc.), Activity ratios (Inventory turnover ratio, Debtor turnover ratio, Creditor turnover ratio, FA turnover ratio, Working Capital Turnover ratio etc.) which helps the bank in mapping the performance of the business with its competitors and industry on an average.