# FFO / Net Debt Ratio Calculation for ØRSTED A/S (2022)

## Understanding FFO / Net Debt Ratio

The FFO (Funds From Operations) / Net Debt ratio under S&P methodology is a credit metric that measures how quickly a company can pay down its debt using funds generated from operations.

**Formula:**
FFO / Net Debt = Operating Cash Flow / Net Debt

Where:
- **FFO (Operating Cash Flow)** = Cash flows from operating activities
- **Net Debt** = Total Debt - Cash and Cash Equivalents

## Extracting Relevant Data for 2022 (FY 2021-01-01 to 2022-01-01)

### Operating Cash Flow (FFO)
- Cash Flows From Used In Operating Activities (2021-2022): **12,148,000,000 DKK**

### Debt Components (as of 2022-01-01)
- Long-term Borrowings: 31,502,000,000 DKK
- Short-term Borrowings: 19,493,000,000 DKK
- **Total Debt** = 31,502 + 19,493 = **50,995,000,000 DKK**

### Cash Position (as of 2022-01-01)
- Cash and Cash Equivalents: **8,614,000,000 DKK**

### Calculating Net Debt
Net Debt = Total Debt - Cash
Net Debt = 50,995 - 8,614 = **42,381,000,000 DKK**

## FFO / Net Debt Calculation

FFO / Net Debt = 12,148,000,000 / 42,381,000,000
FFO / Net Debt = **0.2866**

This ratio indicates that at the 2022 year-end, ØRSTED's operating cash flow could cover approximately 28.66% of its net debt in one year, which is reasonable for a capital-intensive energy infrastructure company but suggests a moderate deleveraging timeline.

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