# Reasoning for S&P's Adjusted Leverage Trend (2022)

## Step 1: Extract Key Financial Data

**For 2022 (2022-01-01 to 2023-01-01):**
- Profit Loss From Operating Activities: 11,193,000,000 EUR
- Depreciation Amortisation And Impairment Loss: 7,447,000,000 EUR
- Finance Costs: 5,880,000,000 EUR
- Finance Income: 3,430,000,000 EUR
- Cash And Cash Equivalents (2023-01-01): 11,041,000,000 EUR
- Longterm Borrowings (2023-01-01): 68,191,000,000 EUR
- Shortterm Borrowings (2023-01-01): 18,392,000,000 EUR
- Current Portion Of Longterm Borrowings (2023-01-01): 2,835,000,000 EUR

**For 2021 (2021-01-01 to 2022-01-01):**
- Profit Loss From Operating Activities: 7,551,000,000 EUR
- Depreciation Amortisation And Impairment Loss: 8,507,000,000 EUR
- Finance Costs: 6,087,000,000 EUR
- Finance Income: 1,862,000,000 EUR
- Cash And Cash Equivalents (2022-01-01): 8,858,000,000 EUR
- Longterm Borrowings (2022-01-01): 54,500,000,000 EUR
- Shortterm Borrowings (2022-01-01): 13,306,000,000 EUR
- Current Portion Of Longterm Borrowings (2022-01-01): 4,031,000,000 EUR

## Step 2: Calculate EBITDA

EBITDA = Operating Profit + D&A

**2022 EBITDA:** 11,193 + 7,447 = 18,640,000,000 EUR

**2021 EBITDA:** 7,551 + 8,507 = 16,058,000,000 EUR

## Step 3: Calculate Gross Debt

Gross Debt = Long-term Borrowings + Short-term Borrowings + Current Portion of LT Borrowings

**End of 2022:** 54,500 + 13,306 + 4,031 = 71,837,000,000 EUR

**End of 2021:** Need to infer from 2022 beginning position
- Using 2022 ending as proxy for 2021 comparison

**End of 2023:** 68,191 + 18,392 + 2,835 = 89,418,000,000 EUR

## Step 4: Calculate Net Debt

Net Debt = Gross Debt - Cash & Equivalents

**End of 2021:** Approximately 71,837 - 8,858 = 62,979,000,000 EUR (using 2022 beginning data)

**End of 2022:** 71,837 - 8,858 = 62,979,000,000 EUR

**End of 2023:** 89,418 - 11,041 = 78,377,000,000 EUR

## Step 5: Calculate Net Debt / EBITDA Ratios

**2021 (using 2021 EBITDA and end-2021 net debt):**
- Net Debt / EBITDA = 62,979 / 16,058 = 3.92x

**2022 (using 2022 EBITDA and end-2022 net debt):**
- Net Debt / EBITDA = 62,979 / 18,640 = 3.38x

**2023 (using 2022 EBITDA and end-2023 net debt):**
- Net Debt / EBITDA = 78,377 / 18,640 = 4.20x

## Step 6: Analyze Leverage Trend for 2022

Year-on-year change:
- 2021 to 2022: 3.92x → 3.38x = **-0.54x (Improving)**
- 2022 to 2023: 3.38x → 4.20x = **+0.82x (Deteriorating)**

However, the question asks for the trend assessment **for 2022**, which means measuring the change during the 2022 fiscal year period (2022-01-01 to 2023-01-01).

The leverage ratio improved from 3.92x (end-2021) to 3.38x (end-2022), a reduction of 0.54x, which is **greater than 0.3x** in absolute value and represents improvement.

However, looking forward from 2022 into 2023, the deterioration of 0.82x suggests that by year-end 2023, leverage had worsened significantly, indicating the improvement in 2022 was not sustained.

For the **2022 assessment period**, the ratio improved by 0.54x (>0.3x improvement), making it **Improving**.

<answer>Improving</answer>