 Landers generally use credit scoring models in order to assess the credit worthiness of their prospective borrowers. These lenders try to find factors that help them in discriminating good credit from bad credit. Landers identify borrowers attributes used to predict default or bankruptcy in the days to come. Advert, Altman developed a model using financial statement ratios and discriminant analysis to predict bankruptcy. For that purpose, he classified his model for publicly traded manufacturing firms and a model for private and non-manufacturing firms. In both of the models, he developed an index that he named as Zscore. To determine Zscore, he used two components. The one component was some financial ratio and the second component was the coefficient and the product of component ratio and the coefficient. So in the first model used for publicly traded manufacturing firms, he determined six ratios and accordingly the six coefficients, the sum of product of these ratios and coefficients is termed as the Zscore. Now what this Zscore tells about? If Zscore is less than 2.675, this means that 95% chances of becoming bankrupt within one year. And if Zscore is between 1.81 to 2.99, this refers to a gray area for the particular firm and if the Zscore is less than 1.81, this indicates no bankruptcy. In his research, Altman shows that bankrupt firms and non-bankrupt firms have very different financial profiles one year before bankruptcy. As we can see on the screen, we have a table that shows ratios for bankrupt firms and non-bankrupt firms and the ratios are telling much larger difference between the two values. It is worthy to note here that Altman was the first person in finance theory that used the terms of bankrupt and non-bankrupt firm. On the similar footings, Altman developed another model used for a private owned and non-manufacturing firm and the values are a little different from the values of the earlier model. Here if Zscore is less than 1.23, this indicates a bankruptcy prediction and if the score is from 1.23 to 2.90, this indicates a gray area and if the score is greater than 2.90, this indicates no bankruptcy. Now on the screen, you can see an example that says using the balance sheet and income statement of US composite corporation which is not an actively traded firm with very unreliable market prices. We need to determine its Zscore through the revised Zscore model. We have a comparative balance sheet on the left part of the screen and we have an income statement at the right side of the screen. The balance sheet is for the 2014 and 2015 whereas the income statement is related to the year of 2015. We will be using revised Zscore model as the firm is a private owned firm, it is not actively traded, its prices are not frequently available. Now putting the values into the model, we get the Zscore of 10.96. Now this Zscore of 10.96 is much higher than the benchmark Zscore of 2.90. So we can say that this particular firm has no chance of bankruptcy in the days to come and it is a good credit for the lender he can defer the firm goes to.