This Z" score model is a four variable version of the Z score approach. It was designed, by its authors, to reduce distortions in credit scores for firms in different industries of different countries. The model's authors have been found it to be extremely effective in assessing the credit risk of corporate bonds in the emerging-market arena. See Altman, E. I., Hartzell and M. Peck.  1995. Emerging Markets Corporate Bonds: A scoring system. New York: Salomon Brothers. Reprinted in Emerging Market Capital Flows, edited by R. Levich. Amsterdam: Kluwer Publishing, 1997.

A column that calculates the contribution of each ratio to the total (score less the constant) has been added, along with a lookup of the historic average probability of default (Moody's) associated the the models assignment of a rating.

When using this model all income statement values must be annual (or twelve month rolling) amounts and total assets should represent only tangible assets. If you reduce total assets for intangible assets, you will also need to reduce equity and/or retained earnings accordingly. If an entity has substantially reorganized or issued a stock divend, the effect of which is to substantially alter retained earnings or book equity, then an appropriate adjustment to these values may be necessary.