A detailed project report and the accompanying CMA data are the documents a credit officer relies on. They are read for internal consistency and for the realism of the assumptions behind the cash flows.
The assumptions lenders challenge first
- Capacity utilisation and the speed of ramp-up.
- Selling price, input cost and margin.
- The working-capital cycle, including inventory and receivable days.
- Capex cost, contingency and the means of finance.
- Promoter contribution and its source.
The ratios behind a sanction
Debt service coverage, current ratio, total outside liabilities to net worth and the margin of security are tested under the base case and under stress. A project that works only under optimistic assumptions will not clear appraisal.
Consistency across documents
Figures in the project report, the CMA data and the projected financials must reconcile. Unexplained differences are the quickest route to repeated queries and delay.
Use it as a planning tool
A rigorous report also tests whether the project should proceed and in what form. The same analysis that satisfies a lender informs the decision to invest. Our strategic and business advisory practice →
Weighing an expansion or restructuring?
Outline the question and a partner will discuss how the analysis could be approached.