Evaluation Models
NRating — Our Proprietary
Credit Assessment Framework
Four interconnected models that translate raw corporate data into actionable credit decisions. Transparent methodology, reproducible outputs, designed for real trade decisions.
A hybrid score that weighs both
financial data and reputation risk
NRating is a 1–5 credit scoring model that incorporates quantitative financial indicators alongside qualitative factors — company location, ownership background, governance and reputation risks that do not appear in financial statements. Unlike pure bankruptcy probability models, NRating captures reputational and structural risks that can impair trade relationships.
The score is centred around 3. The following factors in particular can reduce the score significantly: negative news or large compensation exposure; registered address mismatched to business scale; undercapitalised or foreign-owned firms with low investment; damage to critical business assets or regulatory constraints.
| Score | Risk Level | Guidance |
|---|---|---|
| 5 | Very Low Risk | No concerns. Active business alliance encouraged. |
| 4 | Low Risk | Suitable for business relationship; potential for collaboration. |
| 3 | Moderate Risk | Trade possible but within recommended credit limit. |
| 2 | High Risk | Trade not recommended. Monitor payment status closely. |
| 1 | Very High Risk | Avoid establishing business relationship. |
| NR | No Rating | Creditworthiness cannot be determined with available information. |
A financial-statement-based benchmark
for maximum accounts receivable exposure
The NR Credit Limit model analyses the target company’s financial statements to estimate two figures: a Gross Credit Limit (total exposure across all counterparties) and a Per-Transaction Limit (per-partner allowance based on estimated number of trading relationships). The output serves as a benchmark — not a ceiling — to identify when credit risk is increasing.
Gross Credit Limit Formula
= Cash & Deposits × 50%
+ Accounts Receivable × 70%
− Accounts Payable × 50%
− Adjusted Short-Term Borrowings × 50%
The per-transaction limit is derived by dividing the Gross Credit Limit by the estimated number of trading counterparties — estimated from capital size and sales volume ranges. This reflects the realistic exposure concentration risk per partner.
A proprietary dual-axis model
for 12-month default probability
NRPD (Naker Rating Probability of Default) estimates the likelihood of a company defaulting within 12 months. Two independent scoring axes are calculated separately and then crossed to produce a final probability range — reflecting the inherent uncertainty of credit risk and avoiding false precision.
Two Independent Scoring Axes
| Axis | What It Measures |
|---|---|
| NR-S Structural Score |
Evaluates the soundness of a company’s financial structure: working capital adequacy, retained earnings, profitability, and asset efficiency. Measures long-term financial resilience and structural stability. |
| NR-C Constitution Score |
Evaluates financial constitution: return on assets, total leverage ratio, and current ratio. Detects liquidity risk and debt-dependency risk that NR-S may underweight — particularly high-leverage or low-liquidity profiles. |
Cross-Logic — How the Final Range Is Determined
Step 1: NR-S produces an independent probability range (Rs)
Step 2: NR-C produces an independent probability range (Rc)
Step 3: If Rs ∩ Rc ≠ ∅ → Final range = intersection (model consistency: High)
Step 4: If Rs ∩ Rc = ∅ → Final range = union (model consistency: Low — proceed with caution)
Risk Zones
Output Example
NRPD: 5.5–8.0% (Grey Zone / Distress Zone boundary)
Model consistency: High — NR-S and NR-C ranges overlap. Elevated leverage and thin current ratio detected; NR-C weighting applied. Parent-company support and qualitative factors are captured separately in the NRating score and are not reflected in this figure.
When financial statements are unavailable, Naker Rating applies a modelled financial statement (NRMFS) using sector-median proxies. The resulting NRPD range carries an explicit confidence indicator (High / Medium / Low) reflecting data quality.
Two-track ESG evaluation
adapted to data availability
Naker Rating’s ESG assessment provides an A–E grade across Environmental, Social and Governance dimensions. Two evaluation tracks accommodate different levels of data availability.
Try our models on your counterparty
Upload a financial statement to the NRPD Web App for instant results, or contact us for a full investigation report with NRating score and credit limit.