I need to calculate the Net Debt / EBITDA ratio for 2022 using S&P methodology. Let me first understand what S&P methodology entails and then extract the relevant figures. ## S&P Methodology for Net Debt / EBITDA Under S&P methodology: - **Net Debt** = Total Debt (short-term + long-term borrowings) minus Cash and Cash Equivalents and minus other liquid investments that are readily available to pay down debt - **EBITDA** = Earnings Before Interest, Taxes, Depreciation, and Amortization For EBITDA under S&P methodology, we typically use: - Operating profit (EBIT) + Depreciation & Amortization - Or: Profit before tax + Interest expense + D&A Let me extract the relevant figures from the data for 2022 (period 2022-01-01 to 2023-01-01): ### Debt Components: - **Long-term Borrowings** (2023-01-01): 15,782,604,000 EUR - **Current Borrowings and Current Portion of Non-current Borrowings** (2023-01-01): 4,239,869,000 EUR Wait - I need to be careful here. The balance sheet dates are 2023-01-01 and 2022-01-01. The 2023-01-01 figures represent the end of 2022 (year-end 2022), and 2022-01-01 represents the end of 2021. For the 2022 ratio, I should use year-end 2022 debt figures (2023-01-01 in the data): - Long-term Borrowings: 15,782,604,000 EUR - Current Borrowings and Current Portion of Non-current Borrowings: 4,239,869,000 EUR **Total Debt** = 15,782,604,000 + 4,239,869,000 = 20,022,473,000 EUR ### Cash and Cash Equivalents: - Cash And Cash Equivalents (2023-01-01): 4,900,205,000 EUR ### Net Debt: Net Debt = Total Debt - Cash and Cash Equivalents Net Debt = 20,022,473,000 - 4,900,205,000 = **15,122,268,000 EUR** ### EBITDA Calculation: For EBITDA, I need to work from the income statement for 2022 (2022-01-01 to 2023-01-01): From the data: - "Profit Loss Before Financial Income And Financial Expenses Income Tax Expense And Extraordinary Contribution To The Energy Sector CESE" = 2,529,993,000 EUR This is essentially EBIT (Operating Profit) = 2,529,993,000 EUR Wait, let me verify this. Looking at the structure: - "Profit Loss Before Provisions Amortisation And Impairment Financial Income And Financial Expenses Income Tax Expense And Extraordinary Contribution To The Energy Sector CESE" = 4,523,539,000 EUR - Less: "Provisions Expenses" = 14,539,000 EUR - Less: "Depreciation Amortisation And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,979,007,000 EUR - = "Profit Loss Before Financial Income And Financial Expenses Income Tax Expense And Extraordinary Contribution To The Energy Sector CESE" = 2,529,993,000 EUR So EBIT = 2,529,993,000 EUR But EBITDA = EBIT + Depreciation & Amortization + Impairment EBITDA = 2,529,993,000 + 1,979,007,000 = **4,509,000,000 EUR** Wait, let me double-check by using another approach. Under S&P methodology, EBITDA can also be calculated as: - Revenue - Cost of Energy Sales and Other - Other operating expenses + D&A Or more directly from the income statement items: - "Net Of Revenue And Cost Of Energy Sales And Other" = 6,121,051,000 EUR - Plus: "Other Income" = 927,450,000 EUR - Less: "Other Income Supplies Ans Services Personnel Costs And Employee Benefits Other Expenses And Impairment Losses On Trade Receivables And Debtors" = -1,836,941,000 EUR (this is negative, so it's an expense of 1,836,941,000) Wait, let me re-read: "Other Income Supplies Ans Services Personnel Costs And Employee Benefits Other Expenses And Impairment Losses On Trade Receivables And Debtors" = -1,836,941,000 EUR This negative value suggests it's a net expense figure. Let me verify: - Services Expense: 1,103,668,000 - Employee Benefits Expense: 770,800,000 - Other Expense By Nature: 829,724,000 - Impairment Loss...: 60,199,000 - Total: 1,103,668,000 + 770,800,000 + 829,724,000 + 60,199,000 = 2,764,391,000 But the combined line shows -1,836,941,000. This doesn't match. Let me re-read... Actually, "Other Income Supplies Ans Services Personnel Costs And Employee Benefits Other Expenses And Impairment Losses On Trade Receivables And Debtors" = -1,836,941,000 EUR This seems to be: Other Income - (Services + Personnel + Other Expenses + Impairment) = 927,450,000 - 1,103,668,000 - 770,800,000 - 829,724,000 - 60,199,000 = 927,450,000 - 2,764,391,000 = -1,836,941,000 ✓ So the operating profit before D&A and provisions would be: Net Revenue (Revenue - Cost of Energy) + Other Income - Operating Expenses = 6,121,051,000 + 927,450,000 - 2,764,391,000 = 4,284,110,000 But we also have "Profit Loss Before Provisions Amortisation And Impairment..." = 4,523,539,000 Hmm, let me check: 6,121,051,000 + 927,450,000 = 7,048,501,000 gross margin incl other income Less: Services 1,103,668,000 = 5,944,833,000 Less: Employee 770,800,000 = 5,174,033,000 Less: Other Expense 829,724,000 = 4,344,309,000 Less: Impairment 60,199,000 = 4,284,110,000 But the stated "Profit Loss Before Provisions Amortisation And Impairment..." is 4,523,539,000. There's a difference. Let me check if Joint Ventures are included... "Joint Ventures And Associates" = 239,429,000 Actually, looking more carefully at the structure, I think "Profit Loss Before Provisions Amortisation And Impairment Financial Income And Financial Expenses Income Tax Expense And Extraordinary Contribution To The Energy Sector CESE" = 4,523,539,000 includes the share of joint ventures. Let me verify: 4,284,110,000 + 239,429,000 = 4,523,539,000 ✓ So: - Operating profit before D&A, provisions, and impairment = 4,523,539,000 - Less: Provisions = 14,539,000 - Less: D&A and impairment = 1,979,007,000 - = EBIT = 2,529,993,000 For EBITDA under S&P methodology, we add back D&A and impairment: EBITDA = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 EUR Or equivalently: 4,523,539,000 + 14,539,000 - wait, no. Let me think again. Actually, standard EBITDA = EBIT + D&A + Impairment (if impairment is operating) From the line "Depreciation Amortisation And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 1,979,007,000 This includes both D&A and impairment. So: EBITDA = EBIT + D&A and Impairment = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 EUR But wait - under S&P methodology, we might need to adjust this. Let me also consider if we should use the pre-provisions figure or not. Actually, looking at S&P methodology more carefully: - EBITDA typically excludes "provisions expenses" if they are non-recurring or restructuring-related, but includes them if they are normal operating provisions. The "Provisions Expenses" of 14,539,000 is quite small relative to the total. For conservative S&P methodology, we might include it or exclude it. Let me check standard practice. Actually, looking at the cash flow statement, "Adjustments For Provisions" = 14,539,000 is added back to profit, suggesting it's a non-cash item. But in EBITDA, we typically start from operating profit and add back D&A. Let me recalculate more carefully using the standard approach: EBITDA = Revenue - Operating Expenses (excluding D&A) Or: EBITDA = Net Revenue + Other Income - Cash Operating Expenses Net Revenue = 6,121,051,000 Other Income = 927,450,000 Total = 7,048,501,000 Cash operating expenses (excluding D&A and impairment): - Services Expense = 1,103,668,000 - Employee Benefits = 770,800,000 - Other Expense By Nature = 829,724,000 - Impairment (IFRS9) = 60,199,000 - Provisions = 14,539,000 Wait, but "Other Expense By Nature" might include some non-cash items or might be cash. Let me think... Actually, the cleanest way is: EBITDA = EBIT + D&A + Impairment losses (operating) = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 EUR But I need to check if S&P includes "provisions" in EBITDA or not. Provisions of 14,539,000 were deducted before EBIT, so they are included in EBIT. Since EBITDA = EBIT + D&A, and EBIT already includes provisions, then EBITDA includes provisions. Alternatively, if we want "clean" EBITDA before all non-cash charges: = 4,523,539,000 (before provisions and D&A) + 14,539,000 (provisions) + 1,979,007,000 (D&A) - wait, this doesn't make sense. Let me restart: - Start: 4,523,539,000 (profit before provisions, D&A, interest, tax) - Less provisions: 14,539,000 → 4,509,000,000 - Less D&A and impairment: 1,979,007,000 → 2,529,993,000 = EBIT So EBITDA = EBIT + D&A and impairment = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 Or EBITDA = profit before provisions, D&A, interest, tax + provisions = 4,523,539,000 + 14,539,000 = 4,538,078,000? No wait, that doesn't match. Actually 4,523,539,000 already includes the share of joint ventures (239,429,000). Let me verify if this is operating or not. Share of joint ventures is typically included in EBIT but is after operating expenses. Hmm, let me re-read: "Profit Loss Before Provisions Amortisation And Impairment Financial Income And Financial Expenses Income Tax Expense And Extraordinary Contribution To The Energy Sector CESE" This is: Profit before provisions, amortization, impairment, financial income/expenses, tax, and CESE. So this = Operating profit + Share of JVs - Provisions - D&A? No wait, it's BEFORE these items. So: Operating result before deducting provisions, D&A, etc. = Net Revenue 6,121,051,000 + Other Income 927,450,000 + Share of JVs 239,429,000 - Services 1,103,668,000 - Employee 770,800,000 - Other 829,724,000 - Impairment 60,199,000 = 6,121,051,000 + 927,450,000 + 239,429,000 - 1,103,668,000 - 770,800,000 - 829,724,000 - 60,199,000 = 7,287,930,000 - 2,764,391,000 = 4,523,539,000 ✓ Then: - Less provisions: 14,539,000 → 4,509,000,000 (this is "Profit before D&A, interest, tax, etc.") - Less D&A and impairment: 1,979,007,000 → 2,529,993,000 = EBIT So EBITDA = 4,509,000,000 + 1,979,007,000? No wait, that's wrong. Let me be more careful. After deducting provisions (14,539,000), we have 4,509,000,000. But this 4,509,000,000 still includes share of JVs and excludes D&A. Actually, I think the proper EBITDA is: EBITDA = EBIT + D&A = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 Or if we want to include the share of JVs in a different way... Actually share of JVs is already in EBIT. Wait, I need to re-check. Is share of JVs included in operating profit or is it after operating profit? Looking at typical income statement structure: - Operating profit (before JVs) - Share of profit of JVs - = EBIT But in this data, "Profit Loss Before Provisions Amortisation And Impairment Financial Income And Financial Expenses..." = 4,523,539,000 already includes JVs. Then after provisions (14,539,000) and D&A (1,979,007,000), we get EBIT = 2,529,993,000. So EBITDA = EBIT + D&A + provisions? No, provisions are typically not added back unless they are non-recurring. Actually, standard EBITDA = Operating Profit + D&A. If provisions are normal operating provisions, they stay in EBITDA. If they are non-recurring, they might be adjusted. For S&P methodology, let me use: EBITDA = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 But wait - I should check if we need to add back the provisions too. Looking at this more carefully: The sequence is: 1. Profit before provisions, D&A, interest, tax = 4,523,539,000 2. Less: Provisions = 14,539,000 3. Less: D&A and impairment = 1,979,007,000 4. = Profit before interest, tax = 2,529,993,000 For EBITDA, we want earnings before interest, tax, AND depreciation, amortization. So: EBITDA = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 But this includes the provisions (14,539,000). If we want "clean" EBITDA before all non-cash charges: = 4,523,539,000 + 1,979,007,000 - wait, no. 4,523,539,000 is BEFORE provisions, so: = 4,523,539,000 - 14,539,000 + 1,979,007,000? No... Let me think again. 4,523,539,000 is profit BEFORE provisions and BEFORE D&A. So: - If provisions are operating: EBITDA = 4,523,539,000 - 14,539,000 + 1,979,007,000? No, that's wrong too. Actually: 4,523,539,000 (before provisions and D&A) → minus 14,539,000 (provisions) = 4,509,000,000 (before D&A) → minus 1,979,007,000 (D&A) = 2,529,993,000 (EBIT) So EBITDA = EBIT + D&A = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 Or equivalently = 4,523,539,000 - 14,539,000 = 4,509,000,000 Wait, that gives 4,509,000,000 = 4,509,000,000. Yes! So EBITDA = 4,509,000,000 whether we calculate it as EBIT + D&A or as profit before provisions and D&A minus provisions. Hmm, but 4,523,539,000 - 14,539,000 = 4,509,000,000. Yes, that's correct. And 2,529,993,000 + 1,979,007,000 = 4,509,000,000. ✓ So **EBITDA = 4,509,000,000 EUR** But wait - I need to double check. Is 4,523,539,000 really "before provisions"? The label says "Profit Loss Before Provisions Amortisation And Impairment". So yes, it's before provisions, amortization, and impairment. Actually, re-reading: "Profit Loss Before Provisions Amortisation And Impairment Financial Income And Financial Expenses Income Tax Expense And Extraordinary Contribution To The Energy Sector CESE" This is profit BEFORE: provisions, amortization, impairment, financial income, financial expenses, income tax, and CESE. So the deductions from this to get to EBIT are: provisions, amortization, and impairment. EBIT = 4,523,539,000 - 14,539,000 - 1,979,007,000 = 2,529,993,000 ✓ EBITDA = EBIT + amortization/depreciation/impairment = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 Or we could say: EBITDA = 4,523,539,000 - 14,539,000 = 4,509,000,000 Wait, that's only subtracting provisions. What about D&A? Let me re-read... "Profit Loss Before Provisions Amortisation And Impairment" - this means the profit figure is BEFORE these items are deducted. So to get to EBIT, we need to deduct provisions, amortization, and impairment. So: EBITDA = this profit figure - provisions (since EBITDA is before D&A but after normal operating provisions... or is it?) Actually, in standard accounting, EBITDA typically includes all operating expenses except D&A. Provisions for things like warranties, bad debts, etc. are normal operating expenses and stay in EBITDA. But if "provisions" here refers to restructuring provisions or other non-recurring items, they might be excluded. For S&P methodology, I believe they typically use: EBITDA = EBIT + D&A + normal operating provisions, or sometimes they adjust for non-recurring items. Given the small size of provisions (14,539,000 vs 1,979,007,000 for D&A), this won't significantly affect the ratio. Let me use the standard calculation: EBITDA = 4,509,000,000 EUR ### Net Debt / EBITDA Ratio: Net Debt = 15,122,268,000 EUR EBITDA = 4,509,000,000 EUR Ratio = 15,122,268,000 / 4,509,000,000 = 3.3536... Let me recalculate more precisely: 15,122,268,000 / 4,509,000,000 = 3.353574... Hmm, but let me double-check my debt calculation. Under S&P methodology, should I include other debt-like items? S&P Net Debt typically includes: - Short-term borrowings - Current portion of long-term debt - Long-term debt - Less: Cash and cash equivalents - Less: Marketable securities/liquid investments From the balance sheet (2023-01-01, i.e., end of 2022): - Longterm Borrowings: 15,782,604,000 - Current Borrowings And Current Portion Of Noncurrent Borrowings: 4,239,869,000 Are there other debt items? Let me check: - "Other Noncurrent Financial Liabilities": 5,159,496,000 - this might include some debt - "Other Current Financial Liabilities": 3,600,893,000 - this might include some debt Under strict S&P methodology, we need to check if these contain debt-like instruments. However, typically "Other Financial Liabilities" might include derivatives, leases, or other items that aren't pure debt. Actually, looking more carefully at S&P methodology, they typically include: - All interest-bearing debt - Bank overdrafts - Finance lease obligations - Sometimes pension deficits or other debt-like items From the data, I don't have a clear breakdown of what's in "Other Noncurrent Financial Liabilities" or "Other Current Financial Liabilities". For a conservative approach, let me check if there are lease liabilities included. Actually, "Rightofuse Assets" = 1,320,270,000, which suggests leases under IFRS 16. The corresponding lease liabilities would typically be in borrowings or other financial liabilities. However, for standard Net Debt calculation, we typically use: - Borrowings (short-term and long-term) as the main debt items Let me check if there are any other obvious debt items: - "Collateral Deposits Associated To Financial Debt-Non Current": 23,765,000 - this is an asset, not liability - "Collateral Deposits Associated To Financial Debt-Current": 29,336,000 - also asset For liabilities that might be debt-like: - "Institutional Partnerships In North America": 2,212,162,000 - this is a noncontrolling interest-type arrangement, might be debt-like Actually, looking at the cash flow statement, there's "Receipts Payments From Institutional Partnerships-North America" = -77,385,000 (negative means outflow). This suggests these are financing activities. Under S&P methodology, "Institutional Partnerships In North America" might be considered a form of debt or hybrid instrument. However, without more detail, I'll use the standard definition. Let me also check: are there any "debt securities" or "bonds" included in other categories? For a standard calculation, I'll use: Total Debt = Long-term Borrowings + Current Borrowings = 15,782,604,000 + 4,239,869,000 = 20,022,473,000 Net Debt = 20,022,473,000 - 4,900,205,000 = 15,122,268,000 But wait - I should also check if there are restricted cash items that shouldn't be subtracted. The "Collateral Deposits Associated To Financial Debt" total 23,765,000 + 29,336,000 = 53,101,000. These are assets but might be restricted. However, they're relatively small. Also, I should check "Other Current Financial Assets" (3,371,795,000) and "Other Noncurrent Financial Assets" (1,924,510,000) for liquid investments. Under S&P methodology, we might subtract liquid investments that are readily available to pay debt. However, without knowing the exact composition, I'll use the standard approach: Cash and Cash Equivalents only. Actually, let me reconsider. Under S&P methodology, "Net Debt" typically includes: + Short-term debt + Long-term debt + Lease liabilities (if not already in debt) - Cash and cash equivalents - Liquid financial assets (if readily available) Given IFRS 16, lease liabilities might be included in borrowings. Let me assume they are. For a more conservative S&P approach, let me also check if "Other Current Financial Assets" and "Other Noncurrent Financial Assets" contain liquid items. But typically these are things like derivatives, loans to others, etc. I'll stick with my calculation: Net Debt = 15,122,268,000 EUR ### Final Calculation: Net Debt / EBITDA = 15,122,268,000 / 4,509,000,000 = 3.3536... Let me verify with more precision: 15,122,268,000 ÷ 4,509,000,000 = 3.353573962... Rounded to 2 decimal places: 3.35x But let me double-check my EBITDA once more. Actually, I want to verify if S&P uses "adjusted EBITDA" or if there are other adjustments. Looking at the data again, I notice "Other Adjustments To Reconcile Profit Loss" = -1,384,104,000 in the cash flow statement. This is quite large and negative. What does this include? Actually, for EBITDA, I should also consider whether to use a "clean" figure that excludes certain items. But S&P typically uses reported EBITDA with standard adjustments. Let me also verify: is 4,509,000,000 the right EBITDA? Alternative calculation from cash flow: "Cash Flows From Used In Operations" = 4,200,324,000 This is before working capital changes and other adjustments. Actually, let me cross-check: From cash flow statement, starting from "Profit Loss" = 1,169,749,000 Add back: D&A = 1,979,007,000 Add back: Provisions = 14,539,000 Adjust for JVs = -208,684,000 (share of profit) Adjust for Finance income/cost = 910,220,000 Gains/losses on disposal = -4,377,000 Working capital and other adjustments... This gets complicated. Let me trust the income statement approach. Actually, I want to re-verify my understanding of "Profit Loss Before Provisions Amortisation And Impairment Financial Income And Financial Expenses Income Tax Expense And Extraordinary Contribution To The Energy Sector CESE". Is this 4,523,539,000 equivalent to "Operating Profit before D&A" or something else? Looking at the structure again: - Net Of Revenue And Cost Of Energy Sales And Other: 6,121,051,000 - Other Income: 927,450,000 - Total income-like items: 7,048,501,000 Expenses: - Services Expense: 1,103,668,000 - Employee Benefits Expense: 770,800,000 - Other Expense By Nature: 829,724,000 - Impairment Loss (IFRS9): 60,199,000 - Total operating expenses: 2,764,391,000 Plus: Joint Ventures And Associates: 239,429,000 So: 7,048,501,000 - 2,764,391,000 + 239,429,000 = 4,523,539,000 ✓ Then after provisions (14,539,000) and D&A (1,979,007,000): = 4,523,539,000 - 14,539,000 - 1,979,007,000 = 2,529,993,000 = EBIT EBITDA = EBIT + D&A = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 Or = 4,523,539,000 - 14,539,000 = 4,509,000,000 Hmm wait, I need to be more careful. Is 4,523,539,000 "before" or "after" the share of JVs? The name says "Profit Loss Before Provisions Amortisation And Impairment Financial Income And Financial Expenses Income Tax Expense And Extraordinary Contribution To The Energy Sector CESE" This suggests it's a profit figure, and the "Before" refers to what comes after in the income statement. So this profit is BEFORE (i.e., prior to deducting) provisions, amortization, etc. In standard income statement order: 1. Revenue 2. Costs 3. = Gross profit 4. Operating expenses 5. = Operating profit 6. Share of JVs 7. = EBIT 8. Financial income/expenses 9. = Profit before tax 10. Tax 11. = Net profit But this company seems to have a different structure with "Net Of Revenue And Cost Of Energy Sales And Other" as a subtotal. Actually, looking at typical utility/energy company income statements, they often show: - Revenue - Cost of energy sales - = Net margin - Other income - Operating expenses (services, personnel, other, impairment) - = Operating profit before JVs - Share of JVs - = EBITDA? No, usually EBIT or operating profit - D&A - = EBIT? No wait... Actually, I think the structure here is: - "Profit Loss Before Provisions Amortisation And Impairment..." = what we'd call "EBITDA before provisions" or "Adjusted EBITDA" or simply operating profit before non-cash charges Then: - Less: Provisions - Less: D&A and impairment - = "Profit Loss Before Financial Income And Financial Expenses..." = EBIT So EBITDA (standard) = EBIT + D&A = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 But wait - some might define EBITDA as before provisions too. In that case: = 4,523,539,000 + 1,979,007,000 - 14,539,000? No... Let me think: if 4,523,539,000 is BEFORE provisions and BEFORE D&A, then: - To get to "clean" EBITDA (before D&A, after normal operating provisions): 4,523,539,000 - 14,539,000 = 4,509,000,000 - Or if provisions are non-recurring: 4,523,539,000 + 1,979,007,000? No, that doesn't work. Actually, I think I'm confusing myself. Let me be very clear: 4,523,539,000 = Profit before provisions, D&A, interest, tax To get to standard EBIT (as reported): - Subtract provisions: 14,539,000 - Subtract D&A and impairment: 1,979,007,000 - = 2,529,993,000 To get to standard EBITDA: - Start from EBIT: 2,529,993,000 - Add back D&A and impairment: 1,979,007,000 - = 4,509,000,000 This 4,509,000,000 is AFTER provisions (14,539,000 were deducted). If S&P wants "clean" EBITDA before all non-cash/non-recurring items: - Start from 4,523,539,000 (before provisions and D&A) - This is effectively "EBITDA before provisions" For S&P methodology, they typically use reported EBITDA with standard adjustments. Provisions of 14,539,000 are small, so whether we include them or not doesn't much matter. Actually, let me check: is 14,539,000 "Provisions Expenses" a non-cash charge like accruals, or is it cash? Looking at the cash flow, "Adjustments For Provisions" = 14,539,000 is added back to profit, suggesting it's a non-cash expense (increase in provision liability). So EBITDA should conceptually add this back too. But in my calculation, 4,509,000,000 already includes the deduction of provisions (since EBIT includes them and we add D&A back to EBIT). Hmm, let me reconsider. If provisions are non-cash and we want "true" EBITDA: = EBIT + D&A + Provisions = 2,529,993,000 + 1,979,007,000 + 14,539,000 = 4,523,539,000 Wait, that's exactly the "Profit Before Provisions Amortisation And Impairment" figure! So "clean" EBITDA (before all non-cash charges) = 4,523,539,000 "Reported" EBITDA (after provisions, before D&A) = 4,509,000,000 For S&P methodology, which do they use? I believe S&P Global Ratings typically uses "adjusted EBITDA" which may add back certain non-recurring or non-cash items. However, for standard leverage ratios, they often use reported EBITDA or make specific adjustments. Given the small difference (14,539,000 / 4,509,000,000 = 0.3%), either figure gives essentially the same ratio. Let me use 4,509,000,000 as the more conservative, standard EBITDA figure. ### Final Ratio: Net Debt = 15,122,268,000 EBITDA = 4,509,000,000 Net Debt / EBITDA = 15,122,268,000 / 4,509,000,000 = 3.3536... Actually, let me re-verify my debt figures one more time. I want to make sure I'm using the right balance sheet date. The question asks for "2022" ratio. The data has: - Balance sheet dates: 2022-01-01 (beginning of 2022 = end of 2021) and 2023-01-01 (end of 2022) - Income statement periods: 2021-01-01 to 2022-01-01 (2021) and 2022-01-01 to 2023-01-01 (2022) For a ratio at "end of 2022", I should use: - Debt at 2023-01-01 (end of 2022) - EBITDA for 2022 (2022-01-01 to 2023-01-01) This is what I used. ✓ Let me also double-check if I should use average debt or year-end debt. S&P methodology typically uses year-end debt for leverage ratios, or sometimes average. For standard Net Debt/EBITDA, it's typically year-end net debt divided by EBITDA for the period. Actually, I want to verify my debt calculation includes everything. Let me look for other potential debt items in current and non-current liabilities: Non-current liabilities: - Longterm Borrowings: 15,782,604,000 - Noncurrent Provisions For Employee Benefits: 644,299,000 (not debt) - Other Longterm Provisions: 922,059,000 (not debt, or maybe debt-like if retirement obligations) - Deferred Tax Liabilities: 1,244,593,000 (not debt) - Institutional Partnerships In North America: 2,212,162,000 (might be debt-like) - Trade Payables And Other Liabilities From Commercial Activities-Non Current: 1,412,454,000 (trade payables, not debt) - Other Noncurrent Financial Liabilities: 5,159,496,000 (need to check) - Noncurrent Payables On Social Security And Taxes Other Than Income Tax: 179,250,000 (not debt) Current liabilities: - Current Borrowings And Current Portion Of Noncurrent Borrowings: 4,239,869,000 - Current Provisions For Employee Benefits: 126,767,000 (not debt) - Other Shortterm Provisions: 51,285,000 (not debt) - Trade Payables And Other Liabilities From Commercial Activities-Current: 8,404,970,000 (trade payables, not debt) - Other Current Financial Liabilities: 3,600,893,000 (need to check) - Tax Liabilities-Current: 1,001,102,000 (not debt) "Other Noncurrent Financial Liabilities" of 5,159,496,000 and "Other Current Financial Liabilities" of 3,600,893,000 could contain debt-like items. However, looking at the cash flow statement, "Receipts Relating To Financial Debt Include Collateral Deposits" = 4,448,815,000 and "Payments Relating To Financial Debt Include Collateral Deposits" = 1,583,281,000. This suggests financial debt movements. Also, "Other Noncurrent Financial Liabilities" increased from 3,039,975,000 to 5,159,496,000, a significant increase. For S&P methodology, I should consider whether to include these. However, without knowing the exact composition, the standard approach is to use "Borrowings" as the debt figure. Actually, let me think about this differently. S&P Global Ratings typically includes in total debt: - All borrowings (short and long-term) - Lease liabilities (if material and not in borrowings) - Pension deficits (if material) - Hybrid instruments (depending on equity content) They typically exclude: - Trade payables - Tax payables - Provisions (unless retirement obligations) - Derivative liabilities (unless embedded in debt) Given the data, I'll stick with Borrowings as the most standard and defensible measure. But let me also consider: should I include "Institutional Partnerships In North America"? These are described as "partnerships" which suggests they might be non-controlling interests rather than debt. However, in the cash flow statement, "Receipts Payments From Institutional Partnerships-North America" is classified as a financing activity, suggesting these are financing in nature. Looking at the balance sheet, "Institutional Partnerships In North America" is in non-current liabilities. This could represent non-controlling interests in project companies or similar structures. Under IFRS, these might be classified as liabilities if they have fixed redemption dates or similar debt-like features. For S&P methodology, they often reclassify certain items. If these "Institutional Partnerships" are effectively debt (e.g., preferred equity in subsidiaries that must be bought out), S&P might include them in debt. However, without more information, I'll use the conservative approach and exclude them from debt, as they're not labeled as "borrowings". Let me do one final check on my numbers: **Debt (2023-01-01):** - Longterm Borrowings: 15,782,604,000 - Current Borrowings And Current Portion Of Noncurrent Borrowings: 4,239,869,000 - Total Debt: 20,022,473,000 **Cash (2023-01-01):** - Cash And Cash Equivalents: 4,900,205,000 **Net Debt:** 20,022,473,000 - 4,900,205,000 = 15,122,268,000 **EBITDA (2022-01-01 to 2023-01-01):** = EBIT + D&A = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 **Ratio:** 15,122,268,000 / 4,509,000,000 = 3.3536... Let me verify with exact arithmetic: 15,122,268,000 / 4,509,000,000 = 15122268 / 4509 (dividing numerator and denominator by 1000) 15122268 ÷ 4509 = ? 4509 × 3 = 13527 15122.268 - 13527 = 1595.268 1595.268 / 4509 = 0.3538... So 3.3538... Let me do long division more carefully: 15122268 / 4509 4509 × 3 = 13527 15122 - 13527 = 1595 Bring down 2: 15952 4509 × 3 = 13527 15952 - 13527 = 2425 Bring down 6: 24256 4509 × 5 = 22545 24256 - 22545 = 1711 Bring down 8: 17118 4509 × 3 = 13527 17118 - 13527 = 3591 So 3.353... with remainder. Actually 15122268 / 4509: Let me use calculator-style: 15122268 ÷ 4509 = 3.353662... Wait, let me recheck: 4509 × 3.353662 = ? 4509 × 3 = 13527 4509 × 0.3 = 1352.7 4509 × 0.05 = 225.45 4509 × 0.003 = 13.527 4509 × 0.0006 = 2.7054 4509 × 0.00006 = 0.27054 4509 × 0.000002 = 0.009018 Adding: 13527 + 1352.7 + 225.45 + 13.527 + 2.7054 + 0.27054 + 0.009018 ≈ 15121.662 Close to 15122.268. Let me be more precise. Actually, let me just do 15122268000 / 4509000000 = 15122268 / 4509 (canceling 3 zeros from each... wait, 15122268000 / 1000 = 15122268, and 4509000000 / 1000 = 4509000) So = 15122268 / 4509000 = 15122.268 / 4509 15122.268 / 4509: 4509 × 3.35 = 15105.15 15122.268 - 15105.15 = 17.118 17.118 / 4509 = 0.003796... So 3.353796... Let me try: 4509 × 3.354 = 15123.186 That's slightly above 15122.268 4509 × 3.353 = 15108.777 15122.268 - 15108.777 = 13.491 13.491 / 4509 = 0.002992... So 3.353 + 0.002992 = 3.355992? No wait... Let me recalculate: 4509 × 3.353 = 15108.777 15122.268 - 15108.777 = 13.491 Hmm, but 4509 × 3.3538 = ? 4509 × 3.353 = 15108.777 4509 × 0.0008 = 3.6072 15108.777 + 3.6072 = 15112.3842 Still not right. Let me be more careful. 15122.268 / 4509 = 3 + remainder/4509 remainder = 15122.268 - 13527 = 1595.268 1595.268 / 4509 = 0.353796... So total = 3.353796... Let me verify: 4509 × 0.353796 = ? 4509 × 0.3 = 1352.7 4509 × 0.05 = 225.45 4509 × 0.003 = 13.527 4509 × 0.0007 = 3.1563 4509 × 0.00009 = 0.40581 4509 × 0.000006 = 0.027054 Adding: 1352.7 + 225.45 = 1578.15 + 13.527 = 1591.677 + 3.1563 = 1594.8333 + 0.40581 = 1595.23911 + 0.027054 = 1595.266164 Close to 1595.268. So 3.353796... ≈ 3.3538 Or more precisely, about 3.354 if we round to 3 decimal places. Actually, let me recalculate from scratch to make sure: Net Debt = 20,022,473,000 - 4,900,205,000 = 15,122,268,000 EBITDA = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 15,122,268,000 / 4,509,000,000 = ? = 15122268 / 4509 (after dividing by 1000) Wait, that's wrong. 15,122,268,000 / 1000 = 15,122,268 And 4,509,000,000 / 1000 = 4,509,000 So = 15122268 / 4509000 = 15122.268 / 4509 Let me do long division: 15122.268 ÷ 4509 4509 goes into 15122 three times (3 × 4509 = 13527) Remainder: 15122 - 13527 = 1595 Bring down .268 → 1595.268 1595.268 / 4509 = ? 4509 × 0.35 = 1578.15 1595.268 - 1578.15 = 17.118 17.118 / 4509 = 0.003796... So 0.35 + 0.003796... = 0.353796... Total: 3.353796... Let me verify: 4509 × 3.353796 = ? 4509 × 3 = 13527 4509 × 0.353796 = 1595.266... 13527 + 1595.266 = 15122.266 Close enough (rounding difference of 0.002). So the ratio is approximately **3.354** or about **3.35x** If I express with more precision: 3.3538... For the final answer, I'll provide 3.35 or 3.354. Let me check if S&P typically reports to 1 or 2 decimal places. Usually 2 decimal places or 1. Actually, looking at this again, I want to make absolutely sure about the EBITDA calculation. Let me cross-check using another approach. From the cash flow statement: "Cash Flows From Used In Operations" = 4,200,324,000 This is cash from operations before working capital changes and other items. In theory, this should approximate EBITDA - taxes - interest + some adjustments. Actually, looking more carefully: "Cash Flows From Used In Operations" = 4,200,324,000 Then adjustments for working capital, etc. to get to "Cash Flows From Used In Operating Activities" = 3,777,785,000 The first figure (4,200,324,000) is typically close to EBITDA. Let me see if this matches my 4,509,000,000. Difference: 4,509,000,000 - 4,200,324,000 = 308,676,000 This difference would be taxes paid, interest paid, and other items. Looking at the cash flow: - "Income Tax And CESE" = -258,849,000 (in the operating section, this is likely taxes paid) - Interest would be in financing or operating depending on classification Actually, looking at the cash flow structure, it seems "Cash Flows From Used In Operations" is before working capital but after some adjustments. Let me trace through: From "Profit Loss" = 1,169,749,000 + "Adjustments For Depreciation And Amortisation..." = 1,979,007,000 + "Adjustments For Provisions" = 14,539,000 + "Adjustments For Joint Ventures And Associates" = -208,684,000 (this is subtracting JV profits) + "Adjustments For Finance Income Cost" = 910,220,000 + "Gains Losses On Disposal..." = -4,377,000 = 1,169,749,000 + 1,979,007,000 + 14,539,000 - 208,684,000 + 910,220,000 - 4,377,000 = 3,860,454,000 Hmm, this doesn't equal 4,200,324,000. Let me check what else is in there. Actually, I need to look at the full list of adjustments. The items I listed might not be complete, or there might be other items. From the data, the items between "Profit Loss" and "Cash Flows From Used In Operations" include: - Adjustments For Depreciation And Amortisation: 1,979,007,000 - Adjustments For Provisions: 14,539,000 - Adjustments For Joint Ventures And Associates: -208,684,000 - Adjustments For Finance Income Cost: 910,220,000 - Gains Losses On Disposal: -4,377,000 - Adjustments For Decrease Increase In Trade And Other Receivables: 405,817,000 - Adjustments For Increase Decrease In Trade And Other Payables: 766,260,000 - Changes In Working Capital To Personnel: -142,137,000 - Changes In Working Capital For Regulatory Assets: 502,859,000 - Other Adjustments To Reconcile Profit Loss: -1,384,104,000 - Income Tax And CESE: -258,849,000 Wait, these last items seem to be after "Cash Flows From Used In Operations". Let me re-read the structure. Actually, looking at the order: 1. "Cash Flows From Used In Operations" = 4,200,324,000 2. "Other Inflows Outflows Of Cash Classified As Operating Activities" = -422,539,000 3. "Cash Flows From Used In Operating Activities" = 3,777,785,000 So "Cash Flows From Used In Operations" is a subtotal before "Other Inflows Outflows". The items I listed must build up to 4,200,324,000. Let me check which items are included. From profit of 1,169,749,000: + D&A 1,979,007,000 = 3,148,756,000 + Provisions 14,539,000 = 3,163,295,000 - JVs 208,684,000 = 2,954,611,000 + Finance income/cost 910,220,000 = 3,864,831,000 - Gains on disposal 4,377,000 = 3,860,454,000 This is 3,860,454,000, not 4,200,324,000. Difference = 339,870,000. Hmm, I'm missing something. Let me check if there are other adjustments I didn't include, or if "Other Adjustments To Reconcile Profit Loss" is included in this subtotal. Actually, re-reading: "Other Adjustments To Reconcile Profit Loss" = -1,384,104,000. This is quite large and negative. Where does this fit? If I add this to 3,860,454,000: 3,860,454,000 - 1,384,104,000 = 2,476,350,000. That's even further from 4,200,324,000. Wait, maybe "Other Adjustments" includes adding back some items. Let me re-read the sign: "Other Adjustments To Reconcile Profit Loss" 2022-01-01 - 2023-01-01: -1384104000 EUR The negative sign suggests this is a negative adjustment (reducing cash flow). But in the context of "adjustments to reconcile profit to cash flow", negative typically means it reduces cash relative to profit. Hmm, but my calculation isn't working. Let me try a different approach: maybe "Cash Flows From Used In Operations" includes working capital changes? Looking at the items: - "Adjustments For Decrease Increase In Trade And Other Receivables" = 405,817,000 (positive means cash inflow, i.e., receivables decreased) - "Adjustments For Increase Decrease In Trade And Other Payables" = 766,260,000 (positive means payables increased) - "Changes In Working Capital To Personnel" = -142,137,000 - "Changes In Working Capital For Regulatory Assets" = 502,859,000 If I add these to 3,860,454,000: 3,860,454,000 + 405,817,000 + 766,260,000 - 142,137,000 + 502,859,000 = 5,393,253,000 That's higher than 4,200,324,000. So these working capital items must be in "Other Inflows Outflows" or elsewhere. Actually, re-reading the structure more carefully. The items seem to be listed in order, and "Cash Flows From Used In Operations" is a subtotal. Let me figure out which items sum to it. From the data, I think the structure is: - Profit Loss: 1,169,749,000 - Plus adjustments (D&A, provisions, JVs, finance, gains/losses, working capital, other, tax) - = Cash Flows From Used In Operating Activities: 3,777,785,000 But there's an intermediate subtotal "Cash Flows From Used In Operations" = 4,200,324,000. I think "Cash Flows From Used In Operations" might be before working capital and tax, while "Cash Flows From Used In Operating Activities" is after. Let me try: Profit 1,169,749,000 + D&A 1,979,007,000 + Provisions 14,539,000 - JVs 208,684,000 + Finance 910,220,000 - Gains 4,377,000 + Other Adjustments? = 1,169,749,000 + 1,979,007,000 + 14,539,000 - 208,684,000 + 910,220,000 - 4,377,000 = 3,860,454,000 Still not 4,200,324,000. Missing 339,870,000. Maybe "Other Adjustments To Reconcile Profit Loss" is actually positive in the calculation? Or maybe I'm misreading the sign. Actually, re-reading: "Other Adjustments To Reconcile Profit Loss" 2022-01-01 - 2023-01-01: -1384104000 EUR Hmm, but maybe this is presented as a negative number meaning "adjustments that reduce profit to get to cash", so in the calculation we'd subtract it. But 3,860,454,000 - 1,384,104,000 = 2,476,350,000, which is wrong direction. Or maybe "Other Adjustments" includes things that are added back. Let me check if the sign convention is different. Actually, I think I need to move on. The income-statement-based EBITDA calculation is more standard and reliable for this purpose. The cash flow statement has complex adjustments that are hard to trace without full line-item detail. Let me verify my EBITDA one more time by checking if 4,509,000,000 makes sense as a multiple of revenue. Revenue = 20,650,764,000 EBITDA margin = 4,509,000,000 / 20,650,764,000 = 21.8% For a utility/energy company, this seems reasonable. EDP is a Portuguese electric utility with generation, transmission, distribution, and supply. EBITDA margins in the 20-30% range are typical for integrated utilities. Net Debt / EBITDA of 3.35x also seems reasonable for a utility company. Many utilities operate with leverage in the 3-5x range. Let me do one final verification of my arithmetic: Net Debt = 15,782,604,000 + 4,239,869,000 - 4,900,205,000 = 20,022,473,000 - 4,900,205,000 = 15,122,268,000 ✓ EBITDA = 2,529,993,000 + 1,979,007,000 = 4,509,000,000 ✓ Ratio = 15,122,268,000 / 4,509,000,000 = 3.353796... Rounded to two decimal places: **3.35** Or if we want more precision: 3.354 I'll provide 3.35 as a reasonable rounded figure, or perhaps 3.354 if more precision is desired. Given the data precision (mostly exact figures), I could provide more decimals. Actually, let me see if the ratio simplifies. 15122268 / 4509 = ? GCD of 15122268 and 4509? 4509 = 3 × 1503 = 3 × 3 × 501 = 3 × 3 × 3 × 167 = 27 × 167? Let me check: 27 × 167 = 4509. Yes! 15122268 / 3 = 5040756 5040756 / 3 = 1680252 1680252 / 3 = 560084 So 15122268 = 27 × 560084 + remainder? Let me check: 27 × 560084 = 15122268. Yes! And 4509 = 27 × 167 So 15122268 / 4509 = 560084 / 167 560084 / 167 = ? 167 × 3000 = 501000 560084 - 501000 = 59084 167 × 300 = 50100 59084 - 50100 = 8984 167 × 50 = 8350 8984 - 8350 = 634 167 × 3 = 501 634 - 501 = 133 167 × 0.8 = 133.6 So 3353.8... 167 × 3353 = 167 × 3000 + 167 × 300 + 167 × 50 + 167 × 3 = 501000 + 50100 + 8350 + 501 = 559951 560084 - 559951 = 133 So 3353 + 133/167 = 3353.796... 133/167 = 0.7964... So 3353.796... / 1000 = 3.353796... So the exact ratio is 3.353796... or about **3.35** For the final answer, I'll use 3.35 as a clean, rounded figure that reflects typical financial reporting precision. However, if we want to be more precise, 3.354 or even 3.3538 would work. Actually, looking at this again, I realize I should check if S&P uses "Average Net Debt" or "Year-end Net Debt". For leverage ratios, S&P typically uses year-end net debt for point-in-time measures, or sometimes average for trends. For a single year ratio, year-end is standard. Also, I should verify: does S&P use LTM (last 12 months) EBITDA? Yes, for a 2022 ratio, we'd use 2022 full year EBITDA, which is what I have. One more check: should I use "Continuing Operations" or total? The data has "Income Tax Expense Continuing Operations" but the profit figures seem to be total. I'll assume total is appropriate. Final answer: **3.35** Actually, let me reconsider if I should include more decimal places. The input data is quite precise, so maybe 3.354 or 3.35 is appropriate. I'll go with 3.35 as it's cleaner and standard for ratio reporting. Hmm, but the instructions say to give a value with no units. Let me provide a more precise value: 3.353796... which rounds to 3.35 or 3.354. I'll use 3.35 as my final answer. 3.35