I need to calculate Net Debt / EBITDA for 2022 and 2023 to determine the trend. First, let me identify the relevant data points and calculate what I need. **For 2023 (year ending 2023-01-01):** - Cash and Cash Equivalents: 5,130,000,000 EUR - Current Debt Securities and Bank Borrowings of Infrastructure Projects: 74,000,000 EUR - Current Debt Securities and Bank Borrowings Excluding Infrastructure Projects: 803,000,000 EUR - Noncurrent Debt Securities and Bank Borrowings of Infrastructure Projects: 7,893,000,000 EUR - Noncurrent Debt Securities and Bank Borrowings Excluding Infrastructure Projects: 2,883,000,000 EUR Total Debt 2023 = 74 + 803 + 7,893 + 2,883 = 11,653,000,000 EUR Net Debt 2023 = Total Debt - Cash = 11,653 - 5,130 = 6,523,000,000 EUR **For 2022 (year ending 2022-01-01):** - Cash and Cash Equivalents: 5,536,000,000 EUR - Current Debt Securities and Bank Borrowings of Infrastructure Projects: 47,000,000 EUR - Current Debt Securities and Bank Borrowings Excluding Infrastructure Projects: 1,049,000,000 EUR - Noncurrent Debt Securities and Bank Borrowings of Infrastructure Projects: 7,362,000,000 EUR - Noncurrent Debt Securities and Bank Borrowings Excluding Infrastructure Projects: 2,151,000,000 EUR Total Debt 2022 = 47 + 1,049 + 7,362 + 2,151 = 10,609,000,000 EUR Net Debt 2022 = Total Debt - Cash = 10,609 - 5,536 = 5,073,000,000 EUR Wait - I need to check if there are other borrowings. Let me look more carefully at the liabilities. Looking at "Current Borrowings And Current Portion Of Noncurrent Borrowings" - this seems to aggregate: - 2023: 877,000,000 EUR - 2022: 1,096,000,000 EUR And "Noncurrent Portion Of Other Noncurrent Borrowings": - 2023: 10,776,000,000 EUR - 2022: 9,513,000,000 EUR Let me verify: Current Borrowings 877 = 74 + 803? = 877. Yes! Noncurrent 10,776 = 7,893 + 2,883? = 10,776. Yes! So my debt calculations are correct. **Now for EBITDA:** I need to calculate EBITDA. From the income statement data: For 2022 (period 2022-01-01 to 2023-01-01): - Profit Loss From Operating Activities: 423,000,000 EUR - Finance Income Cost: -320,000,000 EUR (this is net, so Finance Costs - Finance Income) - Depreciation/Amortization: 299,000,000 EUR Actually, let me think about this more carefully. The standard approach is: EBITDA = Operating Profit + Depreciation + Amortization From the data: - "Profit Loss From Operating Activities" 2022-2023: 423,000,000 EUR - "Amortisation Expense" 2022-2023: 299,000,000 EUR But wait - I need to check if "Profit From Operations Before Impairment And Disposals" or "Profit Loss From Operating Activities" is the right starting point. Looking at the structure: - Gross Profit: 728,000,000 - Amortisation Expense: -299,000,000 - Profit From Operations Before Impairment: 429,000,000 - Impairment: -6,000,000 - Profit Loss From Operating Activities: 423,000,000 So Operating Profit (EBIT) = Profit Loss From Operating Activities = 423,000,000? Actually, typically EBIT excludes financing costs and taxes. Let me check if "Profit Loss From Operating Activities" includes financing or not. Looking at the full structure: - Profit Loss From Operating Activities: 423,000,000 - Then Financial Result: -365,000,000 (infrastructure) + 45,000,000 (excl. infra) = -320,000,000 total Finance Income Cost - Then Share of Profit of Associates: 165,000,000 - Profit Before Tax: 268,000,000 Check: 423 - 320 + 165 = 268? = 423 - 320 + 165 = 268. Yes, 423 - 320 = 103, + 165 = 268. Correct. So "Profit Loss From Operating Activities" is before financing costs and associates. This is essentially EBIT. But wait - does it include depreciation? Let me check: Gross Profit 728 - Amortisation 299 = 429 (Profit From Operations Before Impairment). Then impairment 6 = 423. So EBITDA = Gross Profit + other operating expenses that are not depreciation? No wait. Actually: Revenue 7,551 + Other Income 2 = 7,553 Revenue and Operating Income - Raw Materials 1,197 - Miscellaneous Operating Expense 4,182 - Employee Benefits 1,446 = Operating Expense 6,825 Gross Profit would typically be Revenue - COGS. But here we have a different structure. Let me use: EBITDA = Profit Loss From Operating Activities + Amortisation Expense + any other depreciation From the cash flow: "Ajustes Al Resultado Por Gastos Por Depreciacion YAmortizacion" = 299,000,000 This suggests depreciation and amortization total is 299,000,000. So EBITDA 2022-2023 = 423,000,000 + 299,000,000 = 722,000,000 EUR? Wait, but is Profit Loss From Operating Activities already after depreciation? Let me check: Profit From Operations Before Impairment 429 - Impairment 6 = 423. And 429 = Gross Profit 728 - Amortisation 299? = 429. Yes! So actually: EBITDA = Gross Profit + other? No, Gross Profit 728 already excludes raw materials and consumables. Then we have: - Gross Profit: 728 - Less: Amortisation: 299 - = Profit From Operations Before Impairment: 429 Wait, that doesn't make sense. Gross Profit minus Amortisation doesn't equal operating profit unless amortisation is the only other expense. Let me re-read: "Gross Profit" 728, "Amortisation Expense" 299, "Profit From Operations Before Impairment" 429. 728 - 299 = 429. So Gross Profit - Amortisation = Profit From Operations Before Impairment? That would mean there are no other operating expenses, which can't be right. Actually, looking more carefully at the structure, I think "Gross Profit" here might mean something different, or the amortisation is already included in the expenses that get to gross profit. Let me try a different approach. From cash flows: Cash Flows From Operating Activities = 1,002,000,000 Adjustments to reconcile profit to operating cash flow: - Adjustments For Reconcile Profit Loss: -697,000,000 - This includes: depreciation 299,000,000, finance costs 320,000,000, etc. Actually, looking at the cash flow statement structure: Profit Loss: 302,000,000 + Adjustments: -697,000,000? That gives negative which doesn't make sense. Wait, let me re-read: "Adjustments For Reconcile Profit Loss" 2022-2023: -697,000,000 Hmm, but then we also have: - Adjustments For Non Controlling Interests: 116,000,000 - Adjustment For Net Profit Loss From Discontinued Operations: -64,000,000 - Adjustments For Income Tax Expense: -30,000,000 - Adjustments For Undistributed Profits: -165,000,000 - Adjustments For Finance Income Cost: 320,000,000 - Adjustments For Gain Loss On Disposals: 6,000,000 - Ajustes...Depreciacion YAmortizacion: 299,000,000 Let me sum these specific adjustments: 116 - 64 - 30 - 165 + 320 + 6 + 299 = 482,000,000 But the total "Adjustments For Reconcile Profit Loss" is -697,000,000. These don't match, so there are more adjustments. Actually, for EBITDA calculation, the standard approach is: EBITDA = Operating Profit + Depreciation + Amortization Or from the bottom up: EBITDA = Revenue - Operating Expenses (excluding D&A) Let me try: Revenue 7,551 + Other Income 2 = Total income 7,553 Operating Expense 6,825 (which includes D&A?) If Operating Expense includes D&A, then EBITDA = 7,553 - (6,825 - 299) = 7,553 - 6,526 = 1,027,000,000 But wait, "Operating Expense" 6,825 = Raw Materials 1,197 + Miscellaneous 4,182 + Employee Benefits 1,446 = 6,825. And Gross Profit = Revenue + Other Income - Operating Expense? = 7,553 - 6,825 = 728. Yes! So Gross Profit = 728. Then EBITDA would be Gross Profit + D&A? = 728 + 299 = 1,027,000,000? No wait, if D&A is already in Operating Expense, then: EBITDA = Revenue + Other Income - (Operating Expense - D&A) = 7,553 - (6,825 - 299) = 7,553 - 6,526 = 1,027,000,000 Or: EBITDA = Gross Profit + D&A = 728 + 299 = 1,027,000,000 But then EBIT = EBITDA - D&A = 728. But we have "Profit Loss From Operating Activities" = 423. There's a discrepancy. Let me check: "Profit From Operations Before Impairment" = 429, and "Profit Loss From Operating Activities" = 423. The difference between Gross Profit 728 and Profit From Operations Before Impairment 429 is 299, which equals Amortisation. So: Gross Profit 728 - Amortisation 299 = 429 (before impairment) Then 429 - Impairment 6 = 423 = Profit Loss From Operating Activities. So actually, there are NO other operating expenses between Gross Profit and Operating Profit. The "Miscellaneous Other Operating Expense" and "Employee Benefits" must be included in what gets to "Gross Profit" or the structure is different than standard. Actually, re-reading: "Gross Profit" in this context seems to be after all operating expenses except amortisation/depreciation. This is non-standard terminology. Let me use: EBITDA = Profit Loss From Operating Activities + Amortisation Expense + any depreciation From cash flow, "Ajustes Al Resultado Por Gastos Por Depreciacion YAmortizacion" = 299,000,000. This is the total D&A. So EBITDA 2022-2023 = 423 + 299 = 722,000,000? But wait, is depreciation already in the 423? From the chain: Gross Profit 728 - Amortisation 299 = 429 before impairment. This suggests 728 is before amortisation. Then EBITDA would be 728 + any other depreciation? Or is 728 already EBITDA? Actually, I think "Gross Profit" here = EBIT + D&A = EBITDA. Then: EBITDA = 728,000,000 EBIT = 728 - 299 = 429,000,000 Operating Profit = 429 - 6 = 423,000,000 This makes sense! So EBITDA 2022-2023 = 728,000,000 EUR? But wait, let me check if there are other adjustments. Hmm, but "Gross Profit" is normally Revenue - COGS. Let me check: Revenue 7,551 + Other Income 2 = 7,553. Gross Profit 728. So "operating expenses" = 7,553 - 728 = 6,825. Which matches Operating Expense. If Gross Profit = EBITDA, then all operating expenses (raw materials, employee benefits, miscellaneous) are "COGS-like" in this structure. Actually for a construction/infrastructure company, this might be the case. Let me proceed with: EBITDA 2022-2023 = 728,000,000? No wait, I need to check if this includes discontinued operations. "Gross Profit" 728 vs "Gross Profit Loss Including Discontinued Operations" 883. The difference is 155, which matches "Gross Profit Loss From Discontinued Operations" 155. So for continuing operations, EBITDA = 728,000,000? Or should we use total including discontinued? For leverage calculations, S&P typically uses total EBITDA. Let me use total including discontinued: 883,000,000. Actually, let me re-check. "Gross Profit" 728 is for period 2022-2023. "Gross Profit Loss Including Discontinued Operations" 883. For 2021-2022: "Gross Profit" 610, "Gross Profit Loss Including Discontinued Operations" 942. So EBITDA 2022-2023 = 883,000,000 (including discontinued) EBITDA 2021-2022 = 942,000,000 (including discontinued) Wait, but is "Gross Profit" the same as EBITDA? Let me verify with the 2021-2022 data: Revenue 6,910 + Other Income 1 = 6,911 Operating Expense 6,301 Gross Profit 610 6,911 - 6,301 = 610. Yes. And EBITDA should be Operating Profit + D&A. Operating Profit (Profit Loss From Operating Activities) = 1,479. D&A = 270. So EBITDA = 1,479 + 270 = 1,749? That doesn't match 942 or 610. Hmm, there's something wrong. Let me re-check 2021-2022: Profit Loss From Operating Activities: 1,479,000,000 Amortisation Expense: 270,000,000 If D&A is 270, and it's an expense, then something before that should be higher. Actually wait - I think I misread. Let me check: "Profit Loss From Operating Activities" 2021-2022 is 1,479,000,000. But "Profit From Operations Before Impairment" is 340,000,000. And "Impairment And Gains Or Losses On Disposal" is 1,139,000,000. 340 + 1,139 = 1,479. Yes! So there was a huge gain on disposal in 2021-2022. And "Gross Profit" 610 = before amortisation 270 = 340 before impairment? No, 610 - 270 = 340. Yes! So: Gross Profit 610 - Amortisation 270 = Profit From Operations Before Impairment 340. Then + Impairment/gain 1,139 = 1,479. This means "Gross Profit" = EBITDA! Because: - EBITDA = EBIT + D&A - EBIT (before impairment and disposal) = 340? No wait... Actually: EBITDA - D&A = EBIT. Here: 610 - 270 = 340. So 340 is EBIT (before impairment). Then 340 + 1,139 gain = 1,479 operating profit. So yes! "Gross Profit" in this company's terminology = EBITDA. Therefore: EBITDA 2022-2023 = 883,000,000 (including discontinued operations) EBITDA 2021-2022 = 942,000,000 (including discontinued operations) Wait, I need to check if 883 is correct for 2022-2023: Gross Profit 728 + Discontinued 155 = 883. Yes. Now for Net Debt calculations, let me be more careful and check if there are other debt-like items. Debt items: - Current Borrowings And Current Portion Of Noncurrent Borrowings: 877 (2023), 1,096 (2022) - Noncurrent Portion Of Other Noncurrent Borrowings: 10,776 (2023), 9,513 (2022) Total Borrowings: 11,653 (2023), 10,609 (2022) Are there other debt-like items? Lease liabilities? - Current Lease Liabilities: 64 (2023), 58 (2022) - Noncurrent Lease Liabilities: 120 (2023), 115 (2022) S&P typically includes lease liabilities in debt. Let me check if they're already in borrowings. Looking at "Noncurrent Liabilities" total: 13,142 (2023), 11,107 (2022) Components of Noncurrent Liabilities: - Noncurrent Provisions For Employee Benefits: 2, 3 - Noncurrent Provisions: 416, 422 - Noncurrent Lease Liabilities: 120, 115 - Noncurrent Portion Of Other Noncurrent Borrowings: 10,776, 9,513 - Other Noncurrent Financial Liabilities: 838, 72 - Deferred Tax Liabilities: 924, 687 - Noncurrent Derivative Financial Liabilities: 66, 295 - Noncurrent Deferred Income: 1,410, 1,403 Sum for 2023: 2 + 416 + 120 + 10,776 + 838 + 924 + 66 + 1,410 = 13,552? But total is 13,142. Doesn't match. Wait, let me re-check. The "Noncurrent Deferred Income Other Than Noncurrent Contract Liabilities" is listed separately at top as 1,410, but is it in Noncurrent Liabilities? Actually looking at structure: "Noncurrent Liabilities" 13,142. The components listed after seem to be breakdown. Let me sum again: 2 + 416 + 120 + 10,776 + 838 + 924 + 66 = 13,142. Yes! The 1,410 is separate/not included? Or maybe I should check. Actually 2+416+120+10,776+838+924+66 = 13,142. Perfect match. So "Noncurrent Deferred Income" is NOT part of "Noncurrent Liabilities" or is listed elsewhere. Similarly for Current Liabilities 5,378 (2023): - Current Lease Liabilities: 64 - Current Borrowings: 877 - Current Derivative Financial Liabilities: 47 - Current Tax Liabilities: 30 - Trade And Other Current Payables: 3,430 - Current Provisions: 930 Sum: 64 + 877 + 47 + 30 + 3,430 + 930 = 5,378. Perfect. So total debt for leverage purposes (including leases): 2023: 11,653 + 64 + 120 = 11,837? Or are leases already in the 11,653? Looking at "Noncurrent Portion Of Other Noncurrent Borrowings" = 10,776. This seems to be just borrowings, not leases. And "Current Borrowings" = 877. Total borrowings = 10,776 + 877 = 11,653. Leases are separate: 120 + 64 = 184. So total debt-like liabilities = 11,653 + 184 = 11,837 for 2023. But wait - are there "Other Noncurrent Financial Liabilities" of 838? Should this be included? For S&P adjusted leverage, typically total debt includes: - Borrowings (current and noncurrent) - Lease liabilities - Sometimes other financial liabilities Let me check what "Other Noncurrent Financial Liabilities" 838 is. This increased from 72 to 838, a big jump. Actually, for conservatism and standard practice, let me include: - All borrowings - Lease liabilities - Other financial liabilities if they're debt-like But let me first try with just borrowings + leases, which is standard. Net Debt 2023 = (11,653 + 184) - 5,130 = 11,837 - 5,130 = 6,707,000,000 Net Debt 2022 = (10,609 + 173) - 5,536 = 10,782 - 5,536 = 5,246,000,000 Wait, let me recheck 2022 leases: 58 + 115 = 173. Yes. Actually, I should also check if there are restricted cash amounts that shouldn't be included in available cash. "Restricted Cash Relating To Infrastructure Projects And Other Financial Assets" noncurrent: 597 (2023), 579 (2022) "Current Restricted Cash And Cash Equivalents Infrastructure Projects": 38 (2023), 47 (2022) Total restricted cash: 635 (2023), 626 (2022) And "Cash And Cash Equivalents Infrastructure Projects": 168 (2023), 207 (2022) "Other Cash And Cash Equivalents Infrastructure Projects": 130 (2023), 160 (2022) The total "Cash And Cash Equivalents" 5,130 includes: - Cash And Cash Equivalents Infrastructure Projects: 168 - Cash And Cash Equivalents Excluding Infrastructure Projects: 4,962 For S&P purposes, typically all cash is deducted, but sometimes restricted cash is excluded. Let me use total cash as reported for simplicity, but note that if restricted cash is excluded, net debt would be higher. Actually, let me re-read: "Cash And Cash Equivalents" 5,130 is the total. The breakdown shows 168 (infra projects) + 4,962 (excluding infra) = 5,130. And within the 168, there's 38 restricted + 130 other = 168. For S&P adjusted leverage, they typically use "Cash and Cash Equivalents" as reported, or sometimes make adjustments. Let me use the reported 5,130 and 5,536. Now let me calculate ratios: **2023:** Net Debt = 11,837 - 5,130 = 6,707 EBITDA = 883 Net Debt / EBITDA = 6,707 / 883 = 7.60x **2022:** Net Debt = 10,782 - 5,536 = 5,246 EBITDA = 942 Net Debt / EBITDA = 5,246 / 942 = 5.57x Change = 7.60 - 5.57 = 2.03x This is much higher than 0.3x, so this would be "Deteriorating". But wait - I need to double-check my EBITDA. Let me reconsider. Actually, I realize I may have made an error. Let me re-check if "Gross Profit" is really EBITDA. For 2022-2023: - Revenue: 7,551 - Other Income: 2 - Raw Materials: -1,197 - Miscellaneous Other Operating Expense: -4,182 (net of fair value adjustments) - Employee Benefits: -1,446 - Total expenses: -6,825 Revenue + Other Income - Operating Expense = 7,553 - 6,825 = 728 = "Gross Profit" Then: Gross Profit - Amortisation = 728 - 299 = 429 = Profit From Operations Before Impairment So yes, Gross Profit = EBITDA. Because EBITDA - D&A = EBIT, and here 728 - 299 = 429, which is "Profit From Operations Before Impairment" (i.e., EBIT before impairment). But wait - is "Gross Profit Including Discontinued Operations" the right EBITDA? Or should I use just continuing operations? For 2022-2023: - Gross Profit (continuing): 728 - Gross Profit from discontinued: 155 - Total: 883 For 2021-2022: - Gross Profit (continuing): 610 - Gross Profit from discontinued: 332 - Total: 942 Actually, looking at the data more carefully, I see "Gross Profit Loss From Discontinued Operations" is 155 for 2022-2023 and 332 for 2021-2022. But is this "Gross Profit" or "Gross Profit/Loss"? The name suggests it could be positive or negative. Here it's positive. For S&P leverage, they typically use total EBITDA including discontinued if discontinued is part of the operations. But if discontinued operations are being sold, they might use continuing only. However, the question asks for "S&P's adjusted leverage trend". S&P typically uses "adjusted" figures which may include their own adjustments. But based on the data given, let me try both. Actually, I realize I should check if there are other items to add back for S&P's "adjusted" EBITDA. S&P typically adjusts for: - Non-recurring items - D&A (already in my calculation if Gross Profit = EBITDA) - Other items But given the data, let me use the simplest approach. Actually, let me re-verify my understanding. Is "Gross Profit" = EBITDA? In standard financial analysis: EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization From the P&L structure: - Start with: Revenue + Other Income = 7,553 - Subtract: Operating Expenses (raw materials, misc, employee benefits) = 6,825 - = "Gross Profit" = 728 But wait - "Miscellaneous Other Operating Expense" includes many things. Is it possible that this includes D&A? No, because "Amortisation Expense" is listed separately. Actually, looking more carefully: "Operating Expense" = 6,825 = Raw Materials 1,197 + Miscellaneous 4,182 + Employee Benefits 1,446. And Gross Profit 728 - Amortisation 299 = 429 = Profit From Operations Before Impairment. This confirms that Amortisation is NOT included in Operating Expense. So "Gross Profit" 728 is indeed BEFORE amortisation. But is "Gross Profit" before other operating expenses? Let me check if there are other operating expenses between Gross Profit and Profit From Operations. From the data: - Gross Profit: 728 - Amortisation Expense: -299 - = Profit From Operations Before Impairment: 429 So there are NO other operating expenses! This means "Gross Profit" = EBIT + Amortisation = EBITDA. Wait, that can't be right for a company of this size. Let me re-check the data structure. Actually, I think I need to re-read the data more carefully. The "Miscellaneous Other Operating Expense" 4,182 - is this net of other income? Or is there a different structure? Let me look at: "Revenue And Operating Income" = 7,553. This equals Revenue 7,551 + Other Income 2. Then "Operating Expense" = 6,825. Then "Gross Profit" = 728 = 7,553 - 6,825. Then "Amortisation Expense" = 299. Then "Profit From Operations Before Impairment" = 429 = 728 - 299. So yes, the structure is: Revenue + Other Income - Operating Expenses (COGS, SGA, etc.) = "Gross Profit" (which is actually EBITDA in standard terms) - D&A = EBIT (before impairment) This is unusual terminology where "Gross Profit" means EBITDA, but the math checks out. So EBITDA 2022-2023 = 728 (continuing) or 883 (including discontinued) EBITDA 2021-2022 = 610 (continuing) or 942 (including discontinued) Now, for S&P leverage, do they use continuing or total? Typically for trend analysis, consistency matters. Let me check if discontinued operations are being divested. "Cash Flows From Divestments In Subsidiaries Or Other Businesses" 2022-2023: 429, and 2021-2022: 1,621. So there are divestments. Also "Noncurrent Assets Or Disposal Groups Classified As Held For Sale" 2022: 1,641, but 2023: only 2. And "Liabilities Included In Disposal Groups" 2022: 1,395, but 2023: 0. This suggests that in 2022 (balance sheet date 2022-01-01), there were significant assets held for sale, but by 2023-01-01, these were largely gone. So the discontinued operations were likely sold during 2022. For 2022-2023, "Profit Loss From Discontinued Operations" is 64, and for 2021-2022 it was 361. The "Gross Profit Loss From Discontinued Operations" was 155 for 2022-2023 and 332 for 2021-2022. Given that discontinued operations are being wound down, S&P might use continuing operations EBITDA for a cleaner leverage metric. Let me try both. **Using continuing operations EBITDA:** 2023: Net Debt / EBITDA = 6,707 / 728 = 9.21x 2022: Net Debt / EBITDA = 5,246 / 610 = 8.60x Change = 0.61x **Using total EBITDA including discontinued:** 2023: Net Debt / EBITDA = 6,707 / 883 = 7.60x 2022: Net Debt / EBITDA = 5,246 / 942 = 5.57x Change = 2.03x Both show deterioration, but the magnitude differs. Actually, let me reconsider whether to include lease liabilities in debt. Under IFRS 16, lease liabilities are already included in debt-like obligations. S&P's "adjusted" debt typically includes leases. But wait - I need to check if the borrowings already include leases. Looking at "Noncurrent Portion Of Other Noncurrent Borrowings" - "Other" might suggest this excludes leases. And "Current Borrowings And Current Portion Of Noncurrent Borrowings" also seems separate from leases. So yes, I should add leases to debt. Let me also check "Other Noncurrent Financial Liabilities" 838. Should this be included? For 2023, this is 838, up from 72 in 2022. This is a huge increase. What is this? Looking at the data, there's no further breakdown. It could be derivative liabilities, put options, or other debt-like instruments. For S&P adjusted debt, they might include this if it's debt-like. If I include Other Noncurrent Financial Liabilities: 2023 Debt = 11,653 + 184 + 838 = 12,675 2022 Debt = 10,609 + 173 + 72 = 10,854 Net Debt 2023 = 12,675 - 5,130 = 7,545 Net Debt 2022 = 10,854 - 5,536 = 5,318 Ratios with continuing EBITDA: 2023: 7,545 / 728 = 10.36x 2022: 5,318 / 610 = 8.72x Change = 1.64x Ratios with total EBITDA: 2023: 7,545 / 883 = 8.54x 2022: 5,318 / 942 = 5.65x Change = 2.89x All show deterioration well above 0.3x. But actually, I need to be more careful. Let me re-check if "Other Noncurrent Financial Liabilities" should be included. S&P's standard adjusted debt includes: - Short-term debt - Long-term debt - Lease liabilities - Pension deficits - Preferred stock - Hybrid instruments - Put options - Minority interest in certain cases The 838 could be put options or other items. But without more detail, let me be conservative and use the standard debt + leases. Actually, let me re-verify my 2022 numbers. Looking at 2022-01-01 balance sheet: Cash: 5,536 Current Borrowings: 1,096 Noncurrent Borrowings: 9,513 Current Lease: 58 Noncurrent Lease: 115 Total Debt + Leases = 1,096 + 9,513 + 58 + 115 = 10,782 Net Debt = 10,782 - 5,536 = 5,246 For 2023-01-01: Cash: 5,130 Current Borrowings: 877 Noncurrent Borrowings: 10,776 Current Lease: 64 Noncurrent Lease: 120 Total Debt + Leases = 877 + 10,776 + 64 + 120 = 11,837 Net Debt = 11,837 - 5,130 = 6,707 Now EBITDA. Let me use continuing operations to be consistent with the debt (which is from continuing operations, as held for sale items are separate). Actually, looking more carefully, the balance sheet at 2022-01-01 includes "Noncurrent Assets Or Disposal Groups Classified As Held For Sale" of 1,641 and "Liabilities Included In Disposal Groups Classified As Held For Sale" of 1,395. These are likely the discontinued operations. By 2023-01-01, these are 2 and 0 respectively, so largely disposed. For leverage calculations, S&P typically wants debt and EBITDA to be consistent. If debt includes liabilities of discontinued operations that were sold, but EBITDA doesn't include their operations, that's inconsistent. Actually, for 2022-01-01 balance sheet, the held for sale liabilities (1,395) are likely NOT included in the main liability categories. Let me check: Total Current Liabilities 2022: 6,543. This includes: - Current Lease: 58 - Current Borrowings: 1,096 - Current Derivatives: 110 - Current Tax: 69 - Trade Payables: 2,813 - Current Provisions: 1,002 Sum: 58 + 1,096 + 110 + 69 + 2,813 + 1,002 = 6,148? But total is 6,543. Missing 395. Wait, let me recheck: "Trade And Other Current Payables" 2,813. Breakdown: - To Trade Suppliers: 1,544 - Customer Advances: 885 - Other Current Payables: 384 Sum: 1,544 + 885 + 384 = 2,813. Yes. And "Current Provisions": 1,002? Let me check: "Current Provisions" 2022: 1,002? The data says "Current Provisions" 2022-01-01: 1002000000. Yes. But 58 + 1,096 + 110 + 69 + 2,813 + 1,002 = 6,148, not 6,543. Difference = 395. Hmm, but "Liabilities Included In Disposal Groups Classified As Held For Sale" is 1,395, not 395. So where does 395 come from? Wait, let me re-add: 58 + 1,096 = 1,154; + 110 = 1,264; + 69 = 1,333; + 2,813 = 4,146; + 1,002 = 5,148? Let me recheck: 58 + 1,096 + 110 + 69 + 2,813 + 1,002: 58 + 1,096 = 1,154 1,154 + 110 = 1,264 1,264 + 69 = 1,333 1,333 + 2,813 = 4,146 4,146 + 1,002 = 5,148 But total Current Liabilities is 6,543. So I'm missing 6,543 - 5,148 = 1,395. And 1,395 = "Liabilities Included In Disposal Groups Classified As Held For Sale"! So the held for sale liabilities ARE included in Current Liabilities! That makes sense. Similarly for 2023: Current Liabilities 5,378, and held for sale liabilities = 0. So for 2022, the 1,395 held for sale liabilities is part of current liabilities. What is it? Likely borrowings, payables, etc. of the disposal group. For debt calculations, if we want debt from continuing operations, we should exclude held for sale liabilities. But S&P typically uses total reported debt. Actually, for trend analysis, using total reported numbers is more consistent. The held for sale liabilities in 2022 were likely mostly current payables, not necessarily debt. Let me check if the 1,096 current borrowings in 2022 includes any held for sale. Probably not directly. Given the complexity, let me use the simplest approach: total debt + leases as reported, with total EBITDA. Net Debt 2023 = 11,837 - 5,130 = 6,707 Net Debt 2022 = 10,782 - 5,536 = 5,246 Wait, I need to recheck 2022. Total Current Liabilities 6,543 includes held for sale 1,395. If held for sale is mostly payables (not debt), then the debt is fine. Actually, let me recheck my 2022 debt. Current borrowings 1,096 + noncurrent borrowings 9,513 = 10,609. Plus leases 173 = 10,782. This seems correct as these are specific line items, not including held for sale payables. For EBITDA, let me use continuing operations to match the debt (which is continuing operations debt, as held for sale items are separate line items). EBITDA continuing 2022-2023: 728 EBITDA continuing 2021-2022: 610 Net Debt / EBITDA: 2023: 6,707 / 728 = 9.21x 2022: 5,246 / 610 = 8.60x Change: 9.21 - 8.60 = 0.61x This is above 0.3x, so "Deteriorating". But wait - I need to check the direction. Net Debt increased from 5,246 to 6,707, and EBITDA decreased from 610 to 728? No, EBITDA increased from 610 to 728. Actually EBITDA went UP (610 to 728), but Net Debt went UP more (5,246 to 6,707). So leverage increased = deterioration. Let me verify: 6,707/728 = 9.21 vs 5,246/610 = 8.60. Yes, 9.21 > 8.60, so leverage increased = deterioration. Actually, I want to double-check my 2021-2022 numbers. The period "2021-01-01 - 2022-01-01" corresponds to the 2022 fiscal year, and balance sheet at "2022-01-01" is the end of that year. Similarly, "2022-01-01 - 2023-01-01" is 2023 fiscal year, and balance sheet at "2023-01-01" is the end. So my pairing is correct: 2022 balance sheet with 2022 fiscal year EBITDA, and 2023 balance sheet with 2023 fiscal year EBITDA. Let me also try with total EBITDA including discontinued, to see if it changes the conclusion: 2023: 6,707 / 883 = 7.60x 2022: 5,246 / 942 = 5.57x Change: 7.60 - 5.57 = 2.03x. Still deterioration, and even more dramatic. Either way, the answer is "Deteriorating". But let me make sure about the 0.3x threshold. The definition says: - Stable: gap among ±0.3x and ±0.3x (i.e., between -0.3x and +0.3x) - Improving: gap lower than -0.3x? Or "lower than 0.3x" meaning improvement (negative change)? Re-reading: "if the gap of the ratio Net Debt / EBITDA year on year is lower than 0.3x is improving. If higher is Deteriorating." Wait, this is ambiguous. Let me re-read carefully: "Consequently if the gap of the ratio Net Debt / EBITDA year on year is lower than 0.3x is improving. If higher is Deteriorating." I think "lower than 0.3x" means the absolute change is less than 0.3x in the improving direction (i.e., ratio went down by more than 0.3x), OR it means the gap is negative and less than 0.3x in absolute value? Actually, re-reading: "the gap of the ratio Net Debt / EBITDA calculated for the years 2022 and 2023 is among ± 0.3x and ± 0.3x year on year." This seems to mean: gap = Ratio_2023 - Ratio_2022. If |gap| ≤ 0.3x, it's Stable. "Consequently if the gap... is lower than 0.3x is improving." I think "lower than 0.3x" means gap < -0.3x? Or does it mean |gap| < 0.3x and negative? Actually, I think the interpretation is: - If gap < -0.3x: Improving (leverage decreased by more than 0.3x) - If -0.3x ≤ gap ≤ +0.3x: Stable - If gap > +0.3x: Deteriorating (leverage increased by more than 0.3x) My gap is +0.61x (using continuing EBITDA) or +2.03x (using total EBITDA). Both are > +0.3x. Therefore: **Deteriorating**. Let me do a final quick sanity check on the numbers: 2023: - Debt: 11,837 (borrowings 11,653 + leases 184) - Cash: 5,130 - Net Debt: 6,707 - EBITDA: 728 (continuing) or 883 (total) - Ratio: 9.21x or 7.60x 2022: - Debt: 10,782 (borrowings 10,609 + leases 173) - Cash: 5,536 - Net Debt: 5,246 - EBITDA: 610 (continuing) or 942 (total) - Ratio: 8.60x or 5.57x Gap: +0.61x or +2.03x. Both > 0.3x. The trend is clearly Deteriorating. Deteriorating