I'll work through this step-by-step for ENEL SpA.

## Step 1: Identify the relevant industry

ENEL SpA is a major European utility company operating in electricity generation, distribution, and supply across Europe and Latin America. It has both regulated (networks/distribution) and unregulated (generation, supply) operations. The most relevant methodologies are **Regulated Utilities** and **Unregulated Power and Gas**. As a diversified utility, I'll apply utility-specific adjustments.

## Step 2: Estimate 2021 Adjusted EBITDA

First, reconstruct EBITDA from the data:

**2021 Operating Profit (EBIT):** €7,551M

**2021 D&A and Impairments:** €8,507M

**EBITDA = EBIT + D&A = 7,551 + 8,507 = €16,058M**

S&P adjustments:
- **Operating lease adjustments:** Not separately available, but likely embedded in D&A already.
- **Hybrid bond treatment:** S&P typically treats perpetual hybrid bonds with intermediate equity content (50% equity, 50% debt). In 2021, hybrid bonds were €2,386M at start, €5,567M at end. The coupons paid (€71M) would be split.
- **Net results from commodity contracts:** €2,523M is included in operating profit already.
- **Share of JV/associates:** €571M is below EBIT line, but S&P may include proportional EBITDA. For simplicity, I'll note this but not add it as it's already reflected in equity method.

**Adjusted EBITDA ≈ €16,058M**

Adding back impairment losses on trade receivables already in operating expenses: already included.

Approximate **Adjusted EBITDA 2021 ≈ €16,058M**

## Step 3: Estimate 2021 FFO

**Cash interest paid (operating activities):** €4,277M
**Less: Cash interest received (operating activities):** €1,365M
**Net cash interest = 4,277 - 1,365 = €2,912M**

S&P adjusts for hybrid coupon (50% treated as interest): 71M × 50% = €36M

**Cash taxes paid:** €1,846M

**FFO = Adjusted EBITDA - net cash interest - hybrid interest adjustment - cash taxes**
**FFO = 16,058 - 2,912 - 36 - 1,846 = €11,264M**

## Step 4: Estimate 2021 Adjusted Debt

**Reported debt:**
- Long-term borrowings: €54,500M
- Short-term borrowings: €13,306M
- Current portion of LT borrowings: €4,031M
- **Total reported debt = €71,837M**

**S&P adjustments:**
- **Hybrid bonds (50% debt):** €5,567M × 50% = €2,784M (but these may already be excluded from reported borrowings since classified as equity). Add €2,784M.
- **Pension deficit:** Employee benefit provisions = €2,724M
- **Operating leases:** Not separately disclosed; likely small relative to total.
- **Cash adjustment:** S&P typically deducts surplus cash. Cash = €8,858M. Conservative: deduct perhaps €5,000M (keeping some operational cash).

**Adjusted Debt 2021 ≈ 71,837 + 2,784 + 2,724 - 5,000 = €72,345M**

## Step 5: 2021 Adjusted Debt / Adjusted EBITDA

**72,345 / 16,058 = 4.51x**

## Step 6: 2021 FFO / Adjusted Debt

**11,264 / 72,345 = 15.6%**

## Step 7: Estimate 2022 Adjusted EBITDA

**2022 Operating Profit (EBIT):** €11,193M

**2022 D&A and Impairments:** €7,447M

**EBITDA = 11,193 + 7,447 = €18,640M**

**Adjusted EBITDA 2022 ≈ €18,640M**

## Step 8: Estimate 2022 FFO

**Cash interest paid:** €5,016M
**Cash interest received:** €2,622M
**Net cash interest = 5,016 - 2,622 = €2,394M**

**Hybrid coupon (50%):** 123M × 50% = €62M

**Cash taxes:** €1,934M

**FFO = 18,640 - 2,394 - 62 - 1,934 = €14,250M**

## Step 9: Estimate 2022 Adjusted Debt

**Reported debt:**
- Long-term borrowings: €68,191M
- Short-term borrowings: €18,392M
- Current portion LT: €2,835M
- **Total = €89,418M**

**Adjustments:**
- Hybrid (50% debt): €5,567M × 50% = €2,784M
- Pension: €2,202M
- Cash deduction: ~€5,000M

**Adjusted Debt 2022 ≈ 89,418 + 2,784 + 2,202 - 5,000 = €89,404M**

## Step 10: 2022 Adjusted Debt / Adjusted EBITDA

**89,404 / 18,640 = 4.80x**

## Step 11: 2022 FFO / Adjusted Debt

**14,250 / 89,404 = 15.9%**

## Step 12: Classify the trend

**Signal 1 - Leverage change:** 4.80x - 4.51x = +0.29x → ≥ +0.2x → **Deteriorating**

**Signal 2 - FFO/Debt change:** 15.9% - 15.6% = +0.3pp = +0.003 → Between -0.03 and +0.03 → **Stable**

**Combining:** One Stable + One Deteriorating = **Deteriorating**

<answer>Deteriorating</answer>