# Analysis of Moody's Adjusted Leverage Trend for Ferrovial SA (2022)

## Key Metrics Extraction

**Leverage Components:**

| Metric | 2023-01-01 | 2022-01-01 | Change |
|--------|-----------|-----------|---------|
| Total Debt (Noncurrent + Current Borrowings) | 11,653 M€ | 10,609 M€ | +1,044 M€ (+9.8%) |
| Noncurrent Borrowings | 10,776 M€ | 9,513 M€ | +1,263 M€ (+13.3%) |
| Current Borrowings | 877 M€ | 1,096 M€ | -219 M€ (-20.0%) |
| Total Assets | 26,284 M€ | 24,882 M€ | +1,402 M€ (+5.6%) |
| Total Equity | 6,354 M€ | 5,829 M€ | +525 M€ (+9.0%) |
| EBITDA proxy (Operating profit + Amortization) | 728 M€ | 610 M€ | +118 M€ (+19.3%) |

## Leverage Ratio Analysis

**Net Debt/EBITDA Proxy:**
- 2022: 10,609 M€ / 610 M€ = **17.4x** (assuming minimal cash impact for comparison)
- 2023: 11,653 M€ / 728 M€ = **16.0x** (improvement in ratio despite higher debt)

**Debt/Total Capitalization:**
- 2022: 10,609 M€ / (10,609 M€ + 5,829 M€) = **64.6%**
- 2023: 11,653 M€ / (11,653 M€ + 6,354 M€) = **64.7%** (essentially stable)

**Debt/Total Assets:**
- 2022: 10,609 M€ / 24,882 M€ = **42.6%**
- 2023: 11,653 M€ / 26,284 M€ = **44.4%** (modest increase)

## Contextual Factors

**Positive Indicators:**
1. **EBITDA Growth**: +19.3% improvement (610M → 728M€) indicates operational strength
2. **Revenue Growth**: +9.3% increase (6,910M → 7,551M€)
3. **Equity Increase**: +9.0%, demonstrating capital base strengthening
4. **Leverage Ratios Improving**: Net debt/EBITDA improved from ~17.4x to ~16.0x despite debt increase
5. **Asset Base Growth**: +5.6%, supporting debt capacity
6. **Operating Efficiency**: Operating profit before impairment improved

**Negative Indicators:**
1. **Absolute Debt Increase**: +9.8% (1,044M€) despite operational improvements
2. **Noncurrent Debt Surge**: +13.3%, indicating increased reliance on long-term borrowing
3. **Debt/Assets Ratio**: Increased from 42.6% to 44.4%
4. **High Absolute Leverage**: Even with EBITDA improvement, ratios remain elevated

## Assessment

For 2022 (the year ending 2023-01-01), the leverage trend is **IMPROVING** because:
- EBITDA growth of 19.3% outpaced debt growth of 9.8%
- Key leverage metrics (Debt/EBITDA equivalent) improved despite absolute debt increase
- The company demonstrated operational improvement and growing equity base
- While debt increased, it did so at a slower pace than operational improvements
- Revenue and EBITDA momentum suggests sustainable leverage improvement trajectory

The debt increase appears to be funded by operational cash generation and strategic capital deployment rather than distress borrowing, consistent with an improving trend.

<answer>Improving</answer>