CMA related ratios

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Querist : Anonymous

Querist : Anonymous (Querist)

23 July 2010 expert,
For CMA related to CC/WC/Term loan which are the relevant ratios and what are their standards....ex. current ratios shld be around 1.33 to get loan.

thanks

Nitin

Nitin (Expert)
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23 July 2010 Pl check interest coverage ratio,debt equity ratio,Total asset to outside liabilites,ROI, GP/NP ratio,networth etc.

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Querist : Anonymous

Querist : Anonymous (Querist)

24 July 2010 thanks! any idea about the standards for each one.

Nitin

Nitin (Expert)
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24 July 2010 Actually the first point of consideration is that nature of industry/business cycle to understand before any standards can be applied for eg in a trading concern current ratio of 2:1 may be very perfect & more then 2:1 can show that business in not doing its work with full productivity but in a manufacturing concern the conclusion can be changed as they may have a bigger cycle from WIP to finished products & then to sell ,similarly in some trade there is a credit of 4-6 months also but their % of margin is high but in some industry it is 10-15 days as the margin of % is low.So as banks /FI analyse these ratio ,they always first understand the industry standards as in a trading concern 1-3% ratio of NP may be v good but for a manufacturing concern it may be too low .Hope you have got my point.

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Querist : Anonymous

Querist : Anonymous (Querist)

24 July 2010 thanks Nitin....could understand a little.