# Analysis of Terna's Adjusted Leverage Trend for 2022

## Key Financial Metrics Calculation

### Debt Position
**2023 (end of 2022 fiscal year):**
- Long-term Borrowings: €8,416.7M
- Short-term Borrowings: €444.1M
- Current Portion of Long-term Borrowings: €1,909.3M
- Total Debt: €10,770.1M

**2022 (end of 2021 fiscal year):**
- Long-term Borrowings: €8,835.0M
- Short-term Borrowings: €1,947.0M
- Current Portion of Long-term Borrowings: €1,640.0M
- Total Debt: €12,422.0M

**Debt Change:** Decreased by €1,651.9M (-13.3%)

### EBITDA Approximation
**2022 Fiscal Year (2022-01-01 to 2023-01-01):**
- Profit from Operating Activities: €1,333.5M
- Add back: Depreciation, Amortisation & Impairment: €725.7M
- **EBITDA ≈ €2,059.2M**

**2021 Fiscal Year:**
- Profit from Operating Activities: €1,200.4M
- Add back: Depreciation, Amortisation & Impairment: €654.4M
- **EBITDA ≈ €1,854.8M**

### Leverage Ratios

**Net Debt (assuming minimal adjustments for cash positioning):**
- 2023: ~€8.6B (Total Debt €10.77B less Cash €2.16B)
- 2022: ~€10.9B (Total Debt €12.42B less Cash €1.57B)

**Net Debt/EBITDA Ratios:**
- 2023: 8,600 / 2,059 = **4.18x**
- 2022: 10,900 / 1,855 = **5.88x**

**Improvement: -1.70x (28.9% reduction)**

## Trend Assessment

### Positive Indicators:
1. **Significant debt reduction:** Total debt decreased €1.65B (-13.3%)
2. **Strong EBITDA growth:** +10.9% year-over-year
3. **Improved cash position:** Cash increased from €1.57B to €2.16B (+€588M)
4. **Operating leverage:** Operating profit grew 11.1% while revenue grew 14.4%
5. **Adjusted leverage metric improved by 1.70x** - substantial improvement in credit metrics

### Negative Indicators:
- Finance costs increased from €95.8M to €121.8M (+26.9%), suggesting higher debt servicing in a rising rate environment
- However, this is offset by much stronger operational deleveraging

## Conclusion

Terna demonstrated clear **deleveraging** in 2022 through:
- Aggressive debt repayment (€1.65B reduction)
- Robust operational performance (11% growth in operating profit)
- Improved cash generation and liquidity
- Net Debt/EBITDA improvement from 5.88x to 4.18x

The trend is decisively **Improving**, with the company making significant progress in reducing financial leverage while maintaining operational momentum.

<answer>Improving</answer>