Project Report for Bank Loan - By CA

The Project report for bank Loan format consists details and projection of business future years Assets, Liabilities, Profit & Loss Account,  Fund Flow, Debt Repayment Capacity and Financial Ratios. Here is details of particulars in project report for Bank Loan-

Assets

There are two types of Assets shown in Project Report for Bank Loan –

1. Fixed Assets

The assets that business plans to use for long term and  more than 12 months in life for Example- Furniture, Machinery, Vehicles etc.

2. Current Asset

The assets that business plans to use for short Term and less than 12 months in life for Example- Stock, Receivables, Bank Balances etc.

3. Financial Ratios

These ratio help banks to analyses the business financial strength , Margin in Loan to Asset, Repayment of Loan capacity, Liquidity in business etc.

Liabilities

The Liability part is divided in three parts in Project Report for Loan which are as follows-

1. Capital Fund

This is fund introduced by owner of firm which can be Proprietor, Partnership firm, Pvt Ltd or Public Ltd Company.

2. Long Term Liabilities

The long term liabilities are liabilities which are payable after period of 12 months for Example- Bank Term Loan, Any other Loan etc.

3. Current Liabilities

The current liabilities are liabilities which are payable within 12 months for example Vendor Payables, Salary Payable, etc.

Financial Ratio

1. Operating Profit Ratio

Operating Profit  means profit derived by business from main core business activities without including any other non operating profit like Interest Income, Capital Gain Income, Sale of Business Assets.

2. Profit before Tax Ratio

 The profit before Tax means the Net profit before Income Tax divided by Net Sales.

3. Current Ratio

The current ratio means the current assets divided by current Liabilities. The current assets are assets which are recoverable is period of 1 Year like Stock, Sales Receivables, Bank Balances etc. The Current Liabilities means assets which are payable in 1 years like Purchase Payables, Expense Payable, Loan Paayable etc.

The minimum current ratio accepted by Bank is 1.5 .

For Example

Current Assets  Rs.150000

Current Liabilities  Rs. 100000

The current Ratio in project report will be 1.5.

Total Loan to Net worth Ratio

The loan to Net worth ratio is calculated in project  Report by dividing Total loan amount  with total net worth of Business.

The net worth means the current amount holed by founders in Business.

PBDIT & Interest Ratio

The PBDIT means profit before deducting deprecation , Interest Expense and Tax. In this, Interest amount is divided by PBDIT to calculate how bigger is  business profit than Interest. 

Debt to Liquid Fund Ratio

This ratio is calculated in project Report by dividing Debt payable during the year with Liquid Fund available during the year. This ratio is calculated to check whether the business will have enough Cash fund to repay the Bank debt during the year.

The minimum Debt to Liquid fund ratio is 3 accepted by Banks.

Inventory to Purchase Ratio

The inventory to purchase ratio is calculated to check the how many days stock is maintained  by business on annual Basis. This ratio is calculated by dividing the Closing Stock with Purchase of whole year