India Stock Statement & Drawing Power Calculator (Cash Credit)

About the India Stock Statement & Drawing Power Calculator (Cash Credit)

Works out the drawing power of a cash credit or overdraft against stock and book debts — what you can actually draw — and makes the monthly stock statement your bank asks for. Fill in the stock by class (raw materials, work in progress, finished goods, stores), the creditors for goods and the book debts by age, take the margins and limits from your sanction letter, and the page works out, line by line, the eligible stock and book debts, the drawing power, the drawing limit (the lower of the drawing power and the sanctioned limit) and what is left to draw — or how far the account is drawn beyond it.

The stock can come from a lots file — the Stock Register’s FIFO layers file or the Inventory Ageing Report’s lots file — so that stock older than your sanction allows is left out, and the book debts from a debtors list with invoice dates. The statement, with its declaration, insurance and signature, is drawn for you to sign and submit, and the page reminds you of RBI’s rule on statements more than three months old.

Without a pass the drawing power and its working are on screen in full and the statement is a free preview, shown as page images marked “not for use”; the statement PDF, the working as CSV and Copy unlock with a Premium pass. Everything is worked out in your browser and never uploaded.

Common uses

• The monthly stock and book-debts statement of a cash credit or overdraft account.
• Knowing before you pay a supplier how much you can still draw.
• Seeing how much old stock and old book debts cost you in drawing power.
• Preparing for the bank’s stock audit or inspection with the working at hand.

How the drawing power is worked out

• Eligible stock = stock at the lower of cost and net realisable value − the stock the sanction does not count.
• Drawing power on stock = eligible stock × (100% − the margin). With the creditors for goods off the stock (“paid stock”, the usual way), it is (eligible stock − creditors) × (100% − the margin).
• Eligible book debts = book debts up to the age the sanction allows − those it does not count.
• Drawing power on book debts = eligible book debts × (100% − the margin on book debts).
• Drawing power = the two together; the drawing limit is the lower of the drawing power and the sanctioned limit, and what is left to draw is the drawing limit less the balance outstanding.

A class of stock can carry its own margin when the sanction says so (a higher one on work in progress, say).

Stock that does not count

Sanction letters usually leave out stock that is old or slow-moving beyond an age (90 or 180 days), obsolete or damaged, not insured, not yours (on consignment, job work for others), already financed (under a letter of credit or bills discounted), and often stores and spares. Put such stock under “Not counted” with the reason, so the bank sees it. Opening a lots file with receipt dates leaves out the lots older than the age you set.

Book debts that do not count

Book debts usually count up to an age from the invoice date — 90 days is common, some sanctions allow 120 or 180 — and debts from related parties or associate concerns, disputed or doubtful debts and those already discounted or factored are left out. A debtors file with a “Related party” or “Disputed” column marks them.

Creditors for goods

Stock bought on credit is not yet yours to borrow against: most sanctions take the sundry creditors for goods off the stock before the margin (“paid stock”). Some take them off the drawing power in full, and a few do not deduct them; choose what your sanction letter says.

RBI’s rules on stock statements

Banks must work out the drawing power from a current stock statement, and statements relied on should not be older than three months: drawings against a drawing power worked out from an older statement are irregular, and a cash credit account where such drawings go on for 90 days in a row becomes a non-performing asset (RBI Master Circular, RBI Directions). A cash credit account whose balance stays above its sanctioned limit or drawing power for 90 days in a row is also “out of order”, and becomes a non-performing asset. The page flags a statement more than three months old and a balance above the drawing limit.

The statement for the bank

The statement shows the borrower and the account, the stock by class with the stock not counted, the margins and the drawing power, the creditors for goods, the book debts by age, the drawing power, the limit, the drawing limit and the balance, the insurance of the stock, a declaration, your signature, and a box for the bank’s use. Print it on your letterhead if the bank asks, sign it and submit it by the date in your sanction letter. Applying for a new or a bigger limit is a different exercise: the CMA Report Generator prepares the CMA data for it.

Limitations

• Not financial advice: your sanction letter and your bank decide how the drawing power is worked out, and the bank may value the stock or the book debts differently.
• The figures are the ones you enter or open: value the stock at the lower of cost and net realisable value, and keep it insured with the bank named in the policy.
• For working capital against stock and book debts only; it does not assess a new limit or a term loan.
• RBI’s rules are summarised from its circulars and directions; your bank applies the version in force for it.

Privacy

On this device; its files download once

Your figures are worked out in this browser and never uploaded; the statement you are filling in is kept on this device until you clear it.