# Step-by-Step Analysis

## Step 1: Identify the Relevant Industry for ØRSTED A/S

Based on the company facts:
- **Primary Business**: ØRSTED operates in renewable energy generation, particularly offshore and onshore wind
- **Geographic Presence**: UK, Germany, Denmark, Poland, Netherlands, US, Taiwan
- **Revenue Model**: Generates power from renewable sources
- **Market Structure**: Mix of regulated and unregulated operations

ØRSTED fits primarily into the **Unregulated Power and Gas** industry methodology, as it is a renewable power generator without protective rate regulation. The company operates as a competitive participant in energy markets, though it may benefit from policy support mechanisms.

## Step 2: Estimate Adjusted_Debt

### Components of Debt (as of 2022-01-01, fiscal year 2022):

**Reported Debt:**
- Long-term Borrowings: 31,502 million DKK
- Short-term Borrowings: 19,493 million DKK
- Total Reported Debt: 50,995 million DKK

**Lease Obligations:**
- Noncurrent Lease Liabilities: 6,812 million DKK
- Current Lease Liabilities: 720 million DKK
- Total Lease Liabilities: 7,532 million DKK

**Hybrid Capital (partially debt-like):**
The S&P methodology treats hybrid capital with debt characteristics. Based on the structure:
- Hybrid Capital: 17,984 million DKK

For hybrid instruments, S&P typically includes a portion (often 50%) as adjusted debt depending on subordination and coupon characteristics. Given that hybrid capital has coupon payments (529 million DKK in 2022) and appears subordinated, I'll include approximately 50% as debt-like:
- Hybrid Capital (50%): 8,992 million DKK

**Pension Deficit:**
- Not explicitly disclosed as a deficit in the balance sheet
- Deferred Tax Assets of 13,281 million DKK may relate to tax deferrals but no pension deficit identified
- Adjustment: 0 million DKK

**Guarantees and Other Off-Balance Sheet Items:**
- None explicitly disclosed
- Adjustment: 0 million DKK

**Other Debt-Like Items:**
- Noncurrent Provisions: 15,124 million DKK (includes environmental and decommissioning provisions)
- Current Provisions: 764 million DKK
- Total Provisions: 15,888 million DKK

Given the nature of these provisions (likely environmental and restoration costs with debt-like characteristics for a renewable energy company), I'll include a portion:
- Provisions (50%): 7,944 million DKK

**Less: Eligible Cash**
- Cash: 8,624 million DKK

### Calculation of Adjusted_Debt:

```
Adjusted_Debt = 50,995 + 7,532 + 8,992 + 7,944 - 8,624
Adjusted_Debt = 66,839 million DKK
```

## Step 3: Estimate Adjusted_EBITDA

### Base EBITDA Reconstruction:

From the income statement for fiscal year 2022 (2022-01-01 to 2023-01-01):

**Starting with Operating Profit:**
- Profit from Operating Activities Before Interest, Taxes, Depreciation and Amortisation: 32,057 million DKK

**Add Back:**
- Depreciation, Amortisation and Impairment Loss: 12,283 million DKK

**Reported EBITDA:**
```
EBITDA = 32,057 + 12,283 = 44,340 million DKK
```

### Adjustments to EBITDA:

**1. Lease Adjustments:**
For unregulated power companies, lease-related EBITDA is typically already captured in operating costs. The lease liability adjustment is handled through debt, not EBITDA normalization.
- Adjustment: 0 million DKK

**2. Non-recurring items:**

**Gains on Disposals of Investments:** 331 million DKK (non-recurring gain - subtract)

**Other Expense by Nature:** 4,963 million DKK
This includes various non-operating items. Breaking this down from context:
- Likely includes mark-to-market losses on derivatives and non-recurring items
- Given the magnitude relative to prior year (386 million in 2021), estimate 3,000 million as non-recurring
- Add back: 3,000 million DKK

**Gains/Losses on Cash Flow Hedges (before tax):** -23,521 million DKK
These are non-cash, non-recurring fair value adjustments on derivatives
- Add back: 23,521 million DKK

**Reclassification Adjustments on Cash Flow Hedges (IS):** -24,395 million DKK
These represent realized/reclassified gains that distort current period EBITDA
- Add back: 24,395 million DKK

**Exchange Differences on Translation:** -3,747 million DKK
Non-operating, non-cash translation adjustments
- Add back: 3,747 million DKK

**Share of Profit from JVs (Core Business):** 114 million DKK
Proportional adjustment for equity-accounted earnings
- Add back (net): -114 million DKK (already included in operating EBITDA)

**3. Pension/Post-employment Adjustments:**
- No explicit pension adjustment needed based on available data
- Adjustment: 0 million DKK

### Calculation of Adjusted_EBITDA:

```
Base EBITDA:                                44,340
Less: Gains on Disposals:                     (331)
Add: Other Non-recurring Expenses:           3,000
Add: Unrealized Derivative Losses:          23,521
Add: Reclassified Hedge Gains:              24,395
Add: Translation Differences:                3,747
Less: Share of JV Earnings:                   (114)
───────────────────────────────────────────
Adjusted_EBITDA:                           98,558 million DKK
```

**Note:** The significant adjustments for derivatives and hedges reflect Ørsted's substantial derivative positions (Current Derivative Financial Assets: 14,078 million DKK; Noncurrent: 2,716 million DKK; Current Liabilities: 32,325 million DKK) which are typical for power companies managing commodity and financial risk but represent non-cash accounting volatility.

## Step 4: Calculate Adjusted_Debt / Adjusted_EBITDA

```
Adjusted_Debt / Adjusted_EBITDA = 66,839 / 98,558
                                 = 0.678
```

<answer>0.68</answer>