DPR and CMA
Understanding CMA Data for Business Finance
The format banks use to assess working capital, and why the years have to tie.
Credit Monitoring Arrangement data is the set of statements banks use to assess working capital limits. It presents the business over several years in a fixed structure so the lender can compute the limit on its method and compare the years.
The forms
An operating statement (sales, costs, profit), an analysis of the balance sheet, a breakdown of current assets and current liabilities, the computation of maximum permissible bank finance or an equivalent working capital assessment, and a fund-flow statement, typically for two audited years, the current year's estimate and two or more projected years.
Why the years must tie
The audited years must match the filed accounts exactly. The current-year estimate must be consistent with the months already elapsed. The projections must follow from the operating cycle assumptions. A lender who finds a mismatch in the audited year stops trusting the projections.
The operating cycle
The limit depends on how long stock is held, how long debtors take to pay and how long creditors allow. These should reflect the business as it is, not a textbook. A rice mill's cycle peaks in the procurement season; a contractor's cycle is driven by retention and milestones. The CMA data should show that.
Enhancement cases
For an existing unit seeking a higher limit, the CMA data has to explain why the cycle or the volume has grown and show that the past limit was used as sanctioned. Over-reliance on bank finance or diversion of working capital into fixed assets will show up in the fund-flow statement.
Official references
Official portals and notifications are the authority on current conditions. Links are provided for reference and may change.
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