# R-Score

Synnax Recovery Score

## R-Score

The R-Score, or “Repayment Score,” estimates the probability that a company will meet its debt obligations over the next six quarters. The score is determined by a decentralized and independent network of machine learning models that assess the ratee's likelihood of falling into one of four risk states: "No Concern," "Profitability Concern," "Liquidity Concern," and "Solvency Concern." Each of these states corresponds to a specific Probability of Default (PD), which is historically calculated using Synnax's proprietary dataset of defaults. This provides insight into the likelihood that a company might enter a state of default within the next 18 months.

The Probability of Default for each state is regularly updated using new data collected by Synnax, sourced quarterly from public and private company filings with market regulators, exchanges, and state company registrars. A company's PD is calculated as a weighted average of the likelihood of each state, as determined by the machine learning models, and the historical PD associated with each state.

The final R-Score is calculated as:

R-Score = 1 - PD.

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