CMA Report for Small Businesses

What is CMA Report?

CMA (Credit Monitoring Arrangement) report is the projection of the future of any business (irrespective of the size or type of business) based upon past performance. It consists of a group of reports in fiscal numbers, ratios, and graphs.

What are the benefits of CMA report preparation for Small businesses?

CMA report preparation contributes widely to every small business. Some of the benefits are mentioned below:

  1. CMA report helps in understanding the state of business: Whether the size or industry of the business is small, medium, or big CMA report preparation helps everybody (owner, employee, or investor) to understand the current financial health of the business and its prospects depending upon its past performance.
  2. CMA report improves employee efficiency: As per the reports employee’s targets can be set and thus there is scope for improvement of employee efficiency.
  3. CMA report increases the chance of obtaining a bank loan: As per RBI guidelines from 1988 to decrease the delay in credit approvals, under the CMA (Credit Monitoring Arrangement), banks have been permitted for sanctioning credit proposals after a detailed analysis of the past performance. So, a CMA report which is professionally prepared can increase the chances of obtaining a bank loan.
  4. CMA report helps Investor– For every startup or small business, CMA report provides the road map to the investor about the business and helps in making decisions for the business whether to keep the funding or not.

What is the CMA Report format for Small Businesses?

  1. CMA Form I: Particulars & information of current & proposed limits:

This is the first form of the CMA report that specifies the brief details of current and proposed bank borrowings and limits from all Banks and Financial Institutions as on the date of application by the borrower.

2. CMA Form II: Operating statement:

This is the second form of the CMA report that provides a detailed analysis of profit and loss of business based on the market scenario. It contains tabs like quantities, sales, expenses, profits.

3. CMA Form III: Analysis of Balance sheet: liabilities and assets

This is the third form of the CMA report provides a detailed analysis of assets and liabilities of the business which helps to analyze various accounting ratios. It contains tabs like short-term borrowings, current borrowings, term liabilities, current assets, total assets, inventory, etc.

4. CMA Form IV: Comparative statement of Current Asset & Current liabilities:

This is the fourth form of the CMA report. These statements are those assets and liabilities which is recoverable or payable within the period of the next 12 months. So any business needs to have strong current assets against current liabilities to maintain the sustainability of the business.

5. CMA Form V: Calculation of Maximum Permissible Bank Finance (MPBF) for working capital:

This is the fifth form of the CMA report. It helps in calculating the maximum amount of funding by any financial institution for the proposed business based upon the projected revenue profits and financial position of the company. In other words, we hereby calculate the valuation of the business.

6. Form VI: Fund flow statement:

The sixth form of the CMA report. It helps to understand where the fund arises (cash inflow) in the business and where the fund (cash outflow) will go. It is categorized into three parts funds received and payable for the operating cycle, investment, and financing of business.

7. Ratio analysis

The seventh form of the CMA report. In which we calculate various accounting ratios like depth equity, net profit, GP ratio that help to understand the sustainability of the business. It is the key criteria for any financer or banker to identify the project for financing.

8. Statements of changes in working capital

Working capital is the fund which we need for running the operations of the business; here we give the detailed chart for monthly/ quarterly/yearly requirements of working capital in the business.

9. Charts

Based on the detailed analysis and reports framed, we give the presentable view in the form of charts that are easy to understand by any entrepreneur or financer.

How TaxReturnWala (TRW) can help you with CMA Report Preparation for small businesses?

Since a professionally efficient CMA Report, Preparation could mean the difference between getting a loan and getting rejected; leave us the worries of getting the CMA Report Preparation done on time. Hiring a consultation with TaxReturnWala (TRW) ensures that we can put our effort into compiling the report for you, and you can put your effort into driving up the growth of your business.

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