# Analysis of S&P's Adjusted Leverage Trend for EDF 2022

## Step 1: Calculate EBITDA for both years

EBITDA = Operating Profit Before Depreciation and Amortisation (EBIT) + D&A adjustments
Or more directly: EBITDA = Operating Profit Before Depreciation and Amortisation

**2022 (2022-01-01 to 2023-01-01):**
- Operating Profit Before Depreciation and Amortisation: -4,986 million EUR
- This is negative, which will impact EBITDA calculation

**2021 (2021-01-01 to 2022-01-01):**
- Operating Profit Before Depreciation and Amortisation: 18,005 million EUR

Let me use the adjusted approach considering the business:
- 2023 EBITDA ≈ -4,986 million EUR (already negative from operations)
- 2022 EBITDA ≈ 18,005 million EUR

## Step 2: Calculate Net Debt

Net Debt = Total Debt - Cash and Cash Equivalents

**As of 2023-01-01 (end of 2022 fiscal year):**
- Other Noncurrent Financial Liabilities: 71,058 million EUR
- Other Current Financial Liabilities: 71,844 million EUR
- Total Gross Debt: 142,902 million EUR
- Cash and Cash Equivalents: 10,948 million EUR
- **Net Debt 2023: 131,954 million EUR**

**As of 2022-01-01 (end of 2021 fiscal year):**
- Other Noncurrent Financial Liabilities: 56,543 million EUR
- Other Current Financial Liabilities: 45,014 million EUR
- Total Gross Debt: 101,557 million EUR
- Cash and Cash Equivalents: 9,919 million EUR
- **Net Debt 2022: 91,638 million EUR**

## Step 3: Calculate Net Debt/EBITDA ratios

**2023 ratio (end of 2022 fiscal year):**
- Net Debt/EBITDA = 131,954 / (-4,986) = **-26.5x** (negative due to negative EBITDA)

**2022 ratio (end of 2021 fiscal year):**
- Net Debt/EBITDA = 91,638 / 18,005 = **5.09x**

## Step 4: Assess the trend

The gap between the two ratios:
- Change = -26.5x - 5.09x = -31.59x (massive deterioration in the ratio itself)

However, the definition states to check if the gap year-on-year is:
- Within ±0.3x = Stable
- Lower than 0.3x = Improving  
- Higher than 0.3x = Deteriorating

The absolute gap is |5.09 - (-26.5)| = 31.59x, which is **far greater than 0.3x**.

This represents a **dramatic deterioration** in leverage metrics, driven by:
1. Shift from positive EBITDA (18,005 million) to deeply negative EBITDA (-4,986 million)
2. Simultaneous increase in Net Debt from 91,638 million to 131,954 million
3. Combined effect creates a massive leverage deterioration

<answer>Deteriorating</answer>