The ICC (International Cricket Council) with some 105 countries as its members averages wins and losses to determine cricket rankings for both the tests and the ODIs (One-Day International). It is the agency that employs the rating formulas according to which the leader is determined for both leagues.
When a test series takes place between any two nations, one point is given to the team that wins the match. If it ends in a draw, then both the teams get half-point each. The team winning the series gets one bonus point, but if the series ends in a draw then again half-point is given to each team.
To convert this series result to actual rating points, here’s how it proceeds:
If the two competing teams have a rating gap of less than 40 points at the commencement of the series, then rating points are calculated as
Series points of the higher ranked team multiplied by 50 points more than the lower ranked team.
Similarly, the lower ranked team score is multiplied by 50 points less than that of the opponent.
However, if the rating gap is equal or more than 40 points then
The stronger team’s series result is multiplied by 10 points more than their own rating and the result is added to the opponent’s series result, which is multiplied by 90 points less than the team’s own rating.
For the team with a lower ranking, its series tally is multiplied by 90 points more than their own rating and then it is added to the opponent’s series result multiplied by 10 points less than the team’s rating.
These new totals are then added to the previous totals that were there before the start of the series.
There are some more rules like any test series should have a minimum of 2 tests and the points will be added only if the series is played in the last four years. Any points accumulated from test series played prior to that are removed. Those series that are played in the latter two years are given more weight and those played in the first two years are counted as half.