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Reviewed by CA Nikhil Gupta · Last reviewed 11 October 2026
Turn base-year sales, costs and operating days into a working-capital requirement, the borrowing need after promoter margin and a term-loan DSCR, with an optional seven-year projection.
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Credit monitoring arrangement data usually requires historical results, assumptions, forecast income statements, estimated balance sheets, working-capital assessments, fund flow, security details and debt servicing ability. There is no one universally mandatory modern Reserve Bank of India MPBF ratio that can replace the approving lender’s policy. This workbench produces a base-year cash-conversion calculation plus an optional multi-year CMA projection. A final lender report still requires audited opening balances, forecast balance sheets, funds flow, security analysis and bank-specific documentation. Use it as supporting evidence within a lender-approved report, not as an assertion that all CMA schedules have been prepared.
Inventory ties up purchase and conversion cost, customer receivables tie up invoiced sales, and supplier credit offsets part of that financing burden. Here inventory is estimated from cost of sales times inventory days over 365. Receivables use sales times receivable days over 365; payables use cost of sales times payable days over 365. Finance can add other operating current assets and liabilities before applying an explicit promoter-margin assumption. Seasonal borrowers should prepare monthly rather than simple annual-average forecasts.
The illustrative DSCR measures projected PAT plus depreciation plus term-loan interest, divided by scheduled term principal plus term interest. This is a common starting convention; a sanction document may use different cash accrual and term-debt definitions. If you confuse total interest with term-loan interest, the ratio is materially distorted. Interest on cash-credit drawings remains within the income-statement estimate but is not automatically included in the term-loan DSCR denominator.
Link sales assumptions to orders, GST returns and historical seasonality. Tie inventory holding to SKU ageing and stock audit evidence; tie receivable days to customer ageing and disputed balances. Check debt schedules against sanctioned rates and dates. Stress the projections for slower collections, 10% sales decline, higher interest costs and delayed commissioning. Use actual GST input credit and payment terms when preparing a final projected balance sheet rather than double-counting working capital.
Lenders commonly look for a term-loan DSCR of 1.25 or more, but the requirement is set by the sanction terms, not by a rule.
No. It is a one-year working capital and repayment-capacity module.
No. Lending institutions set conditions in their credit policy and sanction letter.
No. Approval remains with the bank after verification and security review.
Rates and rules were checked against these sources on 11 October 2026. Notifications and standards change; confirm on the official site before you file, book or advise.
Educational working tool. Results follow the scope and assumptions above and the figures you enter; they are not tax, audit, legal or accounting advice. Tax and accounting treatment depends on facts and on the law or standard in force for the relevant period, so verify the official source or consult a professional before you rely on a result.
Background, worked examples and the rules behind these numbers.