Executive Summary
- Form 6 consolidates DSCR, TOL/TNW, Current Ratio, and FACR in one sheet
- This is typically the first form a credit officer checks closely
- Each ratio is computed directly from figures already presented in Forms 1–5
- Threshold failures here trigger scrutiny of the underlying forms that produced them
The Four Key Ratios on This Sheet
CMA Form 6 consolidates the four ratios credit officers check most consistently: DSCR (repayment capacity), TOL/TNW (overall leverage), Current Ratio (short-term liquidity), and FACR — Fixed Asset Coverage Ratio (security coverage for term loans). Every figure here is computed directly from data already presented in Forms 1 through 5, not introduced fresh.
DSCR — Repayment Capacity
DSCR is calculated using the formula covered in detail in our DSCR calculation guide — net profit plus depreciation plus interest, divided by principal plus interest — presented year by year across the projection period. Most PSU banks require average DSCR of at least 1.25, with 1.5 considered comfortably strong.
TOL/TNW and Current Ratio — Leverage and Liquidity
TOL/TNW measures total outside liabilities against tangible net worth, with most PSU banks preferring a ratio below 3:1 for MSME lending — see our dedicated TOL/TNW guide for the full threshold detail. Current Ratio, ideally at or above 1.33:1, measures short-term liquidity — whether current assets adequately cover current liabilities.
FACR — Fixed Asset Coverage
For term loans specifically, FACR measures the value of fixed assets (often the assets being financed) against the term loan amount, indicating security coverage. Banks typically prefer FACR above 1.25, meaning fixed assets provide meaningful cushion beyond the loan amount itself — relevant for secured term loans more than for CGTMSE-backed collateral-free facilities, where this ratio carries less weight.