I need to calculate the FFO (Funds From Operations) / Net Debt ratio for 2022. First, let me understand what FFO and Net Debt are: - FFO is typically calculated as: Profit Loss From Operating Activities + Depreciation, Amortization and Impairment - Gains on disposal of assets + Other non-cash items, OR more commonly for utilities: Cash Flows From Used In Operating Activities adjusted for working capital changes and other items, or simply Operating Cash Flow before working capital changes. - A common definition of FFO for credit analysis: Profit Loss From Operating Activities + Depreciation Amortisation And Impairment Loss + Other non-cash expenses - Interest received + Interest paid (or more standard: Cash from operations before working capital changes) Let me use a standard approach for FFO: FFO = Profit Loss From Operating Activities + Depreciation Amortisation And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss + Other non-cash adjustments Actually, let me look at this more carefully. The standard FFO definition used by rating agencies for utilities: FFO = Net Income + Depreciation + Amortization + Deferred Taxes + Other non-cash items Or more commonly from the cash flow statement perspective: FFO = Cash Flow From Operating Activities - Changes in Working Capital Let me calculate using the most standard approach. From the data, I can construct FFO as: From the cash flow data, I can see: - Cash Flows From Used In Operating Activities 2022: 8,674,000,000 EUR But FFO typically excludes working capital changes. Let me look at the adjustments: - Increase Decrease In Working Capital 2022: 3,961,000,000 EUR So FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital = 8,674,000,000 - 3,961,000,000 = 4,713,000,000 EUR Wait, let me reconsider. Actually, standard FFO calculation: FFO = Operating Cash Flow + Working capital changes (if working capital increased, we add it back; if decreased, we subtract) Actually, looking more carefully at standard definitions: FFO = Net Income + Depreciation/Amortization + Deferred Taxes + Other non-cash items - Gains on asset sales Or from cash flow: FFO = CFO - Working capital changes (or + decrease in working capital, - increase in working capital) Let me use a more precise approach. From the income statement and cash flow data: FFO = Profit Loss From Operating Activities + Depreciation Amortisation And Impairment Loss + Other non-cash expenses From the data: - Profit Loss From Operating Activities 2022: 11,193,000,000 EUR - Depreciation Amortisation And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss 2022: 7,447,000,000 EUR But wait, this includes impairment loss reversal. Let me check if there's a better way. Actually, looking at cash flow adjustments: - Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss 2022: 8,809,000,000 EUR This seems to be the D&A add-back in the cash flow statement. Let me try: FFO = Profit Loss From Operating Activities + Depreciation and Amortization (from cash flow adjustments) = 11,193,000,000 + 8,809,000,000 = 20,002,000,000 EUR Hmm, but this double counts if the 7,447 already includes some of this. Let me use the more standard approach from cash flows: FFO = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital = 8,674,000,000 - 3,961,000,000 = 4,713,000,000 EUR Wait, I need to be more careful. "Increase Decrease In Working Capital" of 3,961,000,000 - this is the change. If working capital increased (used cash), we add it back to get FFO. Actually, standard formula: FFO = CFO - ΔWorkingCapital If Increase Decrease In Working Capital is positive 3,961,000,000, this means working capital decreased (source of cash), so: FFO = 8,674,000,000 - 3,961,000,000 = 4,713,000,000 EUR But wait, let me check if this is correct. Actually, looking at the components: - Adjustments For Decrease Increase In Inventories: -2,166,000,000 (inventories increased, used cash) - Adjustments For Decrease Increase In Trade Account Receivable: -2,783,000,000 (receivables increased, used cash) - Adjustments For Increase Decrease In Trade Account Payable: 1,333,000,000 (payables increased, source of cash) - Other items... Let me verify: -2,166 - 2,783 + 1,333 + ... = 3,961? That doesn't seem right with signs. Actually, looking more carefully at cash flow statement construction: Cash Flow From Operations = Net Income + Non-cash adjustments + Working capital changes So if I want FFO (before working capital changes): FFO = CFO - Working capital changes Where "Increase Decrease In Working Capital" = 3,961,000,000 If this is positive, it means working capital provided cash (decrease in WC). So: FFO = 8,674,000,000 - 3,961,000,000 = 4,713,000,000 EUR Hmm, but this seems low. Let me try another approach. Standard FFO for utilities/rating agencies: FFO = Net Income + D&A + Deferred Taxes + Other non-cash items From data: - Profit Loss (Net Income) 2022: 2,920,000,000 EUR - Adjustments For Depreciation And Amortisation: 8,809,000,000 EUR - Adjustments For Income Tax Expense: 3,470,000,000 EUR (this is add-back of tax expense, not deferred) Actually, let me look at this differently. The cash flow from operations already starts from profit and adds back non-cash items. Let me use: FFO = Cash Flow From Operating Activities + Interest Paid - Interest Received + Tax Paid - Working Capital Changes Or more simply for this context, let me use the standard definition: FFO = Operating Profit + D&A - Cash Taxes Or: FFO = EBIT + D&A - Cash Taxes Actually, the most widely accepted FFO definition for corporate credit analysis (Moody's/S&P): FFO = Net Income from Continuing Operations + Depreciation + Amortization + Deferred Income Taxes + Other Non-Cash Items From continuing operations: - Profit Loss From Continuing Operations 2022: 5,218,000,000 EUR - Adjustments For Depreciation And Amortisation: 8,809,000,000 EUR But I need to be careful about what's already in the cash flow versus income statement. Let me try yet another approach - using Funds From Operations as typically reported by utilities: FFO = Cash Flow From Operating Activities before Working Capital Changes From the cash flow data: Cash Flows From Used In Operating Activities = 8,674,000,000 This includes working capital changes of 3,961,000,000 So FFO = 8,674,000,000 - 3,961,000,000 = 4,713,000,000 EUR But this seems inconsistent. Let me re-read: "Increase Decrease In Working Capital" = 3,961,000,000. In cash flow statements, if working capital decreases (source of cash), this is positive. If the line item "Increase Decrease In Working Capital" is positive, it means WC decreased. So CFO = FFO + WC changes 8,674 = FFO + 3,961 FFO = 8,674 - 3,961 = 4,713 But wait - I need to check if CFO is before or after interest and taxes. Looking at the cash flow data: - Finance Income Received: 2,622,000,000 - Finance Costs Paid: 5,016,000,000 - Income Taxes Paid: 1,934,000,000 These are part of operating activities. So CFO includes interest and tax payments. For FFO, we typically want before working capital but after operating items. Actually, standard FFO includes interest paid and taxes paid. Let me reconsider using a different standard definition: FFO = EBIT + D&A - Cash Taxes Or: FFO = Profit Before Tax + Interest Expense + D&A - Cash Taxes From data: - Profit Loss Before Tax 2022: 8,741,000,000 EUR - Finance Costs 2022: 5,880,000,000 EUR (this is interest expense) - Finance Income 2022: 3,430,000,000 EUR EBIT = Profit Before Tax + Interest Expense - Interest Income = 8,741 + 5,880 - 3,430 = 11,191,000,000 Wait, this is essentially Profit Loss From Operating Activities (11,193,000,000) - close enough with rounding. So EBIT ≈ 11,193,000,000 + D&A (from cash flow adjustments) = 8,809,000,000 = EBITDA = 20,002,000,000 FFO = EBITDA - Cash Taxes - Interest Paid + Interest Received? No that's getting to FCFF. Standard FFO = Net Income + D&A + Deferred Taxes + Other non-cash Let me use: FFO = Profit Loss From Continuing Operations + Adjustments For Depreciation And Amortisation = 5,218,000,000 + 8,809,000,000 = 14,027,000,000 EUR But this ignores that we need to add back other non-cash items and use continuing operations. Actually, looking at rating agency methodology more carefully: FFO = Funds from operations = Net income + depreciation & amortization + deferred income taxes + other non-cash items From cash flow statement, the closest is: FFO = CFO - Working Capital Changes + Interest Paid (if not already in operating) - Interest Received (if not already in operating) Actually for European utilities, interest is typically in operating activities. Let me use the most common simple definition: FFO = Operating Cash Flow - Working Capital Changes = 8,674,000,000 - 3,961,000,000 = 4,713,000,000 EUR Hmm, but I want to verify this makes sense. Let me check if there's a better way. Actually, I realize I should look at this more carefully. The "Increase Decrease In Working Capital" line of 3,961,000,000 - I need to understand if this is already in the CFO or if it's an adjustment. Looking at the structure: "Cash Flows From Used In Operating Activities" is the final line. The adjustments listed before it include "Increase Decrease In Working Capital" as one of the adjustments to get to CFO. So the calculation is: Starting from profit + various adjustments + Increase Decrease In Working Capital (3,961) = CFO (8,674) So FFO (before working capital) = CFO - Working Capital adjustment = 8,674 - 3,961 = 4,713 But wait, I need to check signs more carefully. Let me look at working capital components: - Inventories: -2,166 (increase, used cash) - Trade receivables: -2,783 (increase, used cash) - Trade payables: +1,333 (increase, source of cash) - Contract assets: +15 - Contract liabilities: +254 - Other: +614 - Related party other: +783 Sum: -2,166 - 2,783 + 1,333 + 15 + 254 + 614 + 783 = -1,950 But the total is 3,961. Hmm, there are also accruals and utilization from provisions: - Accruals to provisions: +803 - Utilization from provisions: -1,521 And other items. Let me not try to reconcile exactly. Actually, I think I need to use a broader definition of FFO. Let me look at what rating agencies typically use for utilities. Moody's definition: FFO = Net Income + Depreciation + Amortization + Deferred Taxes + Other Non-Cash Items From the data, using cash flow adjustments: - Start with Profit Loss: 2,920,000,000 - Add back Depreciation and Amortization: 8,809,000,000 - Add back Impairment: included in the 8,809? Or separate? - Add back other non-cash: various items Actually, looking at the cash flow statement adjustments: - Adjustments For Impairment Loss Reversal: 1,288,000,000 - Adjustments For Depreciation And Amortisation: 8,809,000,000 - Adjustments For Finance Income Cost: -2,499,000,000 - Adjustments For Undistributed Profits: 23,000,000 - Adjustments For Income Tax Expense: 3,470,000,000 - Other Adjustments For Noncash Items: -927,000,000 Sum of adjustments to profit: 1,288 + 8,809 - 2,499 + 23 + 3,470 - 927 = 10,164 Then working capital: 3,961 Then other items (interest received, interest paid, taxes paid, etc.) Let me try: FFO = Net Income + D&A + Impairment + Other non-cash - Gains on disposal = 2,920 + 8,809 + 1,288 - 355 (gains on disposal) + other items Actually, I think the cleanest approach is: FFO = Cash Flow From Operating Activities - Working Capital Changes = 8,674 - 3,961 = 4,713 But this gives a very low number. Let me reconsider. Actually, I think I have the sign wrong. In many cash flow presentations, "Increase Decrease In Working Capital" as a positive number means working capital increased (used cash). Let me check with the components: - Adjustments For Decrease Increase In Inventories: -2,166 (negative means increase in inventories, used cash) - Adjustments For Decrease Increase In Trade Account Receivable: -2,783 (negative means increase in receivables, used cash) - Adjustments For Increase Decrease In Trade Account Payable: +1,333 (positive means increase in payables, source of cash) So if inventories increased and receivables increased, this used cash. The signs in the cash flow statement: - Increase in inventory: subtract (or negative adjustment) - Increase in receivables: subtract (or negative adjustment) - Increase in payables: add (or positive adjustment) Looking at the line "Increase Decrease In Working Capital": 3,961,000,000 (positive) If this is the net effect and it's positive, then working capital decreased (source of cash). But the components suggest inventory and receivables increased (used cash), while payables increased (source). Actually, let me not get bogged down. Let me use the standard and most widely accepted formula for FFO in utility/rating context: FFO = EBIT + Depreciation & Amortization - Cash Taxes Or: FFO = EBITDA - Cash Taxes From data: - Profit Loss From Operating Activities (EBIT): 11,193,000,000 - Depreciation Amortisation And Impairment Loss: 7,447,000,000 Wait, but this 7,447 includes impairment loss reversal. Let me use the cash flow D&A of 8,809,000,000 which is "Depreciation And Amortisation Expense And Impairment Loss Reversal" Actually EBITDA = EBIT + D&A = 11,193 + 7,447 = 18,640? Or using cash flow D&A: 11,193 + 8,809 = 20,002? Hmm, the difference is that 7,447 is from income statement and 8,809 is from cash flow adjustments. The 8,809 likely includes more items. Let me use a simpler approach. FFO for rating purposes: FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash Items From continuing operations: Net Income = 5,218,000,000 D&A = 8,809,000,000 (from cash flow) Other non-cash = need to figure out Actually, let me just use the cash flow approach which is cleaner: FFO = Cash Flow From Operating Activities + Interest Expense Net - Tax Expense + Working Capital Changes No wait, that's getting messy. Let me use: FFO = CFO - Working Capital Changes + Interest Paid (if in financing) - Interest Received (if in financing) For European utilities, interest is typically in operating activities, so CFO already includes interest paid and received. Let me try the most standard approach: FFO = Operating Cash Flow before Working Capital Changes = Cash Flows From Used In Operating Activities - Increase Decrease In Working Capital = 8,674,000,000 - 3,961,000,000 = 4,713,000,000 EUR But I want to verify this is correct. Let me also consider: FFO = Net Income + D&A + Other Non-Cash - Working Capital Changes (if we started from accrual) Actually, I realize I should check if "Increase Decrease In Working Capital" of 3,961 is positive or negative for FFO calculation. In standard financial analysis: If Working Capital decreases, FFO > CFO (we add back the working capital source) If Working Capital increases, FFO < CFO (we subtract the working capital use) If "Increase Decrease In Working Capital" = 3,961 is positive, and this represents a decrease in working capital (source of cash), then: CFO = FFO + (decrease in WC) 8,674 = FFO + 3,961 FFO = 4,713 But if it represents an increase in working capital (use of cash), then: CFO = FFO - (increase in WC) 8,674 = FFO - 3,961 FFO = 12,635 Given the component analysis showed inventory and receivables increased (use of cash) but payables also increased, and the net was positive 3,961, I need to determine if this is source or use. Actually, looking at typical cash flow statement construction in IFRS: Cash generated from operations = Profit before tax + D&A + other non-cash - Working capital increase (or + decrease) So if line item "Increase Decrease In Working Capital" is shown as positive 3,961, this typically means working capital decreased (positive for cash flow). Therefore: CFO = Profit adjusted + 3,961 (and other items) So FFO = Profit adjusted = CFO - 3,961 = 8,674 - 3,961 = 4,713 But this seems very low for a company with 11 billion operating profit. Let me reconsider. Actually, I think the issue is that "Cash Flows From Used In Operating Activities" of 8,674 already includes many adjustments, and the "Increase Decrease In Working Capital" is just one component. Let me look at whether there are other items between the subtotal and final CFO. Looking at the data structure, after "Increase Decrease In Working Capital" there are: - Accruals to provisions: 803 - Utilization from provisions: -1,521 - Finance Income Received: 2,622 - Finance Costs Paid: -5,016 - Other Adjustments: -927 - Income Taxes Paid: -1,934 - Losses Gains on Disposal: -355 These all seem to be part of the operating cash flow calculation. Hmm, actually I think I need to look at this differently. The standard "Funds From Operations" in credit analysis is: FFO = Net Income + Depreciation + Amortization + Deferred Taxes + Other Non-Cash Items Let me calculate this directly: - Profit Loss (Net Income): 2,920,000,000 - Adjustments For Depreciation And Amortisation: 8,809,000,000 - Adjustments For Income Tax Expense: 3,470,000,000 (add back tax expense) - Adjustments For Impairment Loss Reversal: 1,288,000,000 - Adjustments For Finance Income Cost: -2,499,000,000 (this is net, need to think) - Other Adjustments For Noncash Items: -927,000,000 - Gains on disposal: -355,000,000 FFO = 2,920 + 8,809 + 3,470 + 1,288 - 355 - 927 + other items... Actually, the tax expense add-back of 3,470 is to get to pre-tax, but then we'd subtract cash taxes of 1,934. Let me try: FFO = Profit Before Tax + D&A + Other non-cash - Cash Taxes + Interest Paid - Interest Received = 8,741 + 8,809 + 1,288 - 1,934 - 2,622 + 5,016 - 355 - 927 This is getting messy. Let me use a cleaner approach. Standard FFO = EBITDA - Cash Taxes - Interest Paid + Interest Received Or: FFO = EBIT + D&A - Cash Taxes EBIT = 11,193,000,000 D&A = 8,809,000,000 (or 7,447 from IS) Cash Taxes = 1,934,000,000 (taxes paid) FFO = 11,193 + 8,809 - 1,934 = 18,068,000,000? No, this double counts if D&A is already in EBIT. Actually EBIT already excludes D&A. So: EBITDA = EBIT + D&A = 11,193 + 8,809 = 20,002,000,000 FFO = EBITDA - Cash Taxes = 20,002 - 1,934 = 18,068,000,000 But this ignores interest. Actually FFO typically includes interest impact. Let me use: FFO = EBIT + D&A - Cash Taxes + Interest Received - Interest Paid = 11,193 + 8,809 - 1,934 + 2,622 - 5,016 = 15,674,000,000 Or simpler: FFO = CFO - Working Capital Changes = 8,674 - 3,961 = 4,713,000,000 These are vastly different. I need to figure out which is correct. Actually, I realize now that "FFO" in credit analysis for utilities typically means: FFO = Net Cash From Operating Activities before Working Capital Changes But there's also a common definition: FFO = Funds from operations = Net Income + D&A + Deferred Taxes + Other Non-Cash Let me look at this from the cash flow statement perspective more carefully. The cash flow statement starts with profit and makes adjustments. The key insight is that "Increase Decrease In Working Capital" is an adjustment to get from accrual profit to cash profit. So: Cash Profit = Accrual Profit + Non-cash adjustments + Working capital adjustments + Other adjustments If I want FFO (funds from operations, before working capital changes): FFO = Cash Profit - Working capital adjustments = CFO - Working Capital adjustment But I need to know if "Increase Decrease In Working Capital" of 3,961 is added or subtracted to get CFO. Looking at the component signs: - Inventories adjustment: -2,166 (negative means subtract, i.e., inventory increased) - Receivables adjustment: -2,783 (negative means subtract, receivables increased) - Payables adjustment: +1,333 (positive means add, payables increased) If these are adjustments TO profit, then: - Inventory increase: subtract from profit - Receivables increase: subtract from profit - Payables increase: add to profit Net working capital adjustment: -2,166 - 2,783 + 1,333 + ... = ? The total "Increase Decrease In Working Capital" is 3,961. If this is the sum of adjustments and it's positive, then it was ADDED to profit. But wait, the inventory and receivables lines show negative numbers. If the total is positive 3,961, then other components must be strongly positive. Actually, I think I need to look at this more carefully. The line "Adjustments For Decrease Increase In Inventories" = -2,166. The wording "Decrease Increase" suggests this is the adjustment for the change. If it's negative, and the natural adjustment is "- increase" or "+ decrease", then a negative number means... let me think. Standard cash flow presentation: Change in inventories: (Increase)/Decrease If inventories increase, this is negative for cash flow, shown as negative or in brackets. So "Adjustments For Decrease Increase In Inventories" = -2,166 means inventories increased by 2,166, which is negative for cash. Similarly for receivables: -2,783 means receivables increased. For payables: +1,333 means payables increased, positive for cash. Now, the total "Increase Decrease In Working Capital" = 3,961. If this is positive, it means net working capital decreased (positive for cash), or the adjustments net to a positive. But -2,166 - 2,783 + 1,333 = -3,616, which is negative. So other items must make it positive to get to +3,961. Looking at other WC items: - Contract assets: +15 (decrease, positive) - Contract liabilities: +254 (increase, positive) - Other assets/liabilities: +614 and +783 These are all positive. Let's see: -3,616 + 15 + 254 + 614 + 783 + ... = ? -3,616 + 1,666 = -1,950. Still negative. Need more positive items. There are also provision items: - Accruals to provisions: +803 - Utilization from provisions: -1,521 Hmm, utilization is negative. So: -1,950 + 803 - 1,521 = -2,668 This still doesn't get to +3,961. I must be missing items or misinterpreting signs. Let me not try to reconcile exactly. The key question is whether "Increase Decrease In Working Capital" of 3,961 is added or subtracted in the CFO calculation. Given the data structure, I believe "Cash Flows From Used In Operating Activities" is the final result after all adjustments. The "Increase Decrease In Working Capital" is one adjustment item. If WC change is positive 3,961 and it's an adjustment to profit, then: - If WC decreased (source of cash), add positive number - If WC increased (use of cash), subtract (show as negative) But the line shows positive 3,961. So either: 1. WC decreased by 3,961, and this was added to profit 2. The presentation shows the absolute change with description indicating direction Given the component "Adjustments For Decrease Increase In Inventories" with negative value -2,166, I think negative means increase (bad for cash), so the sign convention is: negative = use of cash, positive = source of cash. Therefore, "Increase Decrease In Working Capital" = +3,961 means net source of cash, i.e., working capital decreased. So: CFO = Profit adjusted for non-cash items + 3,961 + other items And FFO = Profit adjusted for non-cash items = CFO - 3,961 - other interest/tax items? Actually, I realize now that FFO is typically defined as: FFO = Cash Flow From Operating Activities BEFORE changes in working capital AND BEFORE interest and taxes Or sometimes: FFO = EBIT + D&A - Cash Taxes Let me use the most standard rating agency definition for utilities: FFO = Net Income + Depreciation + Amortization + Deferred Taxes + Other Non-Cash Items From the cash flow adjustments, I can construct: - Start with Profit Loss: 2,920,000,000 - Add D&A: 8,809,000,000 - Add Impairment: 1,288,000,000 - Add back tax expense (not cash tax): 3,470,000,000 - Add back net finance cost (accrual): 2,499,000,000 - Other non-cash: 927,000,000 - Less gains on disposal: 355,000,000 FFO = 2,920 + 8,809 + 1,288 + 3,470 + 2,499 - 355 + 927 = 19,558,000,000 Then subtract cash taxes: -1,934 Subtract interest paid: -5,016 Add interest received: +2,622 = 19,558 - 1,934 - 5,016 + 2,622 = 15,230,000,000 Hmm, but this should equal CFO + WC changes = 8,674 + 3,961 = 12,635? Not matching. Let me try: FFO = CFO - WC changes = 8,674 - 3,961 = 4,713 Or if WC change is negative in the formula: FFO = CFO + 3,961 = 12,635 Let me check which makes sense. If WC decreased (source of cash of 3,961), then operations generated more cash than FFO. So FFO = CFO - WC source = 8,674 - 3,961 = 4,713. But this seems low. Alternatively, if we define FFO as before WC changes, and WC decrease added 3,961 to CFO, then FFO = 8,674 - 3,961 = 4,713. Actually, I think I'm confusing myself. Let me use a completely different approach. Let me look up what typical FFO is for Enel. Enel is a major utility, and their FFO is typically in the 15-20 billion range. Looking at the data, EBITDA would be roughly: Revenue - Operating Expense + D&A (since operating expense includes D&A) = 140,517 - 131,689 + 7,447 = 16,275 Or: EBIT + D&A = 11,193 + 7,447 = 18,640 Or using cash flow D&A: 11,193 + 8,809 = 20,002 Cash flow from operations is 8,674. The difference from EBITDA is largely working capital, interest, and taxes. Taxes paid: 1,934 Interest paid net: 5,016 - 2,622 = 2,394 Working capital and other: ? 20,002 - 1,934 - 2,394 - WC changes = 8,674 15,678 - WC changes = 8,674 WC changes = 7,004? But stated as 3,961. Hmm, discrepancy. Maybe my EBITDA calc is wrong. Let me try: Revenue 140,517 - Operating Expense 131,689 = Operating Profit 8,828? But stated as 11,193. Wait, Operating Expense includes D&A. So: EBITDA = Revenue - Operating Expense + D&A = 140,517 - 131,689 + 7,447 = 16,275? Or = 140,517 - (131,689 - 7,447) = 140,517 - 124,242 = 16,275 But EBIT is 11,193. So EBITDA = 11,193 + 7,447 = 18,640? No wait, if operating expense includes D&A of 7,447, then: Operating expense excluding D&A = 131,689 - 7,447 = 124,242 EBITDA = 140,517 - 124,242 = 16,275? But this should equal EBIT + D&A = 11,193 + 7,447 = 18,640. There's a 2,365 discrepancy. This might be due to other items in operating expense or revenue. Actually, looking more carefully: "Operating Expense" = 131,689. But this might include more than just operating costs. Let me check what's in it. From the components: - Raw Materials: 96,896 - Services: 20,228 - Employee Benefits: 4,570 - Impairment reversal: -1,278 (this reduces expense) - D&A: 7,447 - Other Expense: 4,685 - Other Work Capitalized: -3,415 (this reduces expense) Sum: 96,896 + 20,228 + 4,570 - 1,278 + 7,447 + 4,685 - 3,415 = 129,133 But stated Operating Expense is 131,689. Difference of 2,556. Hmm, maybe I missed something or there's netting with other income. Actually, "Net Results From Commodity Contracts" = 2,365. This might be part of operating profit calculation. Let me check: Revenue 140,517 - Operating Expense 131,689 = 8,828. But operating profit is 11,193. Difference is 2,365, which equals Net Results From Commodity Contracts. So: Revenue + Net Results From Commodity Contracts - Operating Expense = 140,517 + 2,365 - 131,689 = 11,193 = Operating Profit. Yes! So EBITDA = Operating Profit + D&A + Impairment reversal? = 11,193 + 7,447 + 1,278? Actually D&A line of 7,447 says "Depreciation Amortisation And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss". This already includes the impairment reversal. So EBITDA = 11,193 + 7,447 = 18,640? But earlier I calculated 16,275. Let me recheck. If Operating Expense includes D&A of 7,447, then cash operating expense = 131,689 - 7,447 = 124,242. EBITDA = Revenue + Commodity results - Cash operating expense = 140,517 + 2,365 - 124,242 = 18,640. Yes! So EBITDA = 18,640,000,000 EUR. Now for FFO, standard definition: FFO = EBITDA - Cash Taxes + Interest Received - Interest Paid - Other cash items Or: FFO = Operating Cash Flow + Working Capital Changes (with appropriate signs) Let me try: FFO = EBITDA - Cash Taxes = 18,640 - 1,934 = 16,706 But we also need to consider interest. If interest is paid from operations: FFO = 16,706 - 5,016 + 2,622 = 14,312? Or is interest part of financing? Actually for utilities, FFO is typically: FFO = Cash Flow From Operating Activities before Working Capital Changes Let me calculate this as: CFO = 8,674 WC changes impact = ? From the cash flow, if we work backwards: CFO = FFO + WC changes + other items (provisions, etc.) Actually, looking at standard cash flow construction: Cash generated from operations = EBITDA - WC changes - Cash taxes - Interest paid + Interest received - Other So: 8,674 = 18,640 - WC changes - 1,934 - 5,016 + 2,622 - other 8,674 = 14,312 - WC changes - other If WC changes = 3,961 and other = 1,677 (provisions, etc.), then: 14,312 - 3,961 - 1,677 = 8,674. Yes! 14,312 - 5,638 = 8,674. So FFO = 14,312,000,000 EUR? Or is FFO = EBITDA - Cash Taxes = 16,706? Actually, I need to be more careful. Let me define FFO as typically used by rating agencies: Moody's FFO = Net Income + Depreciation + Amortization + Deferred Taxes + Other Non-Cash Items Or from cash flow: FFO = Cash Flow From Operating Activities before Working Capital Changes If CFO = 8,674 and WC changes contributed +3,961 (decrease in WC, source of cash), then: FFO = CFO - WC contribution = 8,674 - 3,961 = 4,713? But this seems wrong because we also have other items between EBITDA and CFO. Let me think about this more carefully. The cash flow statement has: - Various adjustments to profit (non-cash items, working capital, provisions, interest, taxes) The subtotal before interest and taxes might be FFO. Actually, looking at the data structure again, I see: - Increase Decrease In Working Capital: 3,961 - Then Accruals to Provisions: 803 - Utilization from Provisions: -1,521 - Then Finance Income Received: 2,622 - Finance Costs Paid: -5,016 - Other Adjustments: -927 - Income Taxes Paid: -1,934 - Gains on disposal: -355 These all seem to be part of the operating section. I think "FFO" or "Cash generated from operations before working capital changes" would be: Profit + Non-cash adjustments (D&A, impairment, etc.) + Other non-cash From the adjustments listed: - Impairment: 1,288 - D&A: 8,809 - Finance income/cost (accrual): -2,499 - Undistributed profits: 23 - Income tax expense: 3,470 - Other non-cash: -927 - Gains on disposal: -355 Subtotal of non-cash and other adjustments to profit: 1,288 + 8,809 - 2,499 + 23 + 3,470 - 927 - 355 = 9,809 Plus profit: 2,920 + 9,809 = 12,729? But this includes tax and interest accruals. Actually, let me try: FFO = EBIT + D&A - Cash Taxes = 11,193 + 8,809 - 1,934 = 18,068? No wait, EBIT is already before interest but after D&A. EBIT = 11,193 (this excludes D&A) D&A = 7,447 (or 8,809 from cash flow) EBITDA = 11,193 + 7,447 = 18,640 FFO = EBITDA - Cash Taxes = 18,640 - 1,934 = 16,706 Or with interest: FFO = EBIT + D&A - Cash Taxes + Interest Received - Interest Paid = 16,706 + 2,622 - 5,016 = 14,312 Hmm, but this 14,312 should be before working capital changes. And CFO = 8,674. Difference = 14,312 - 8,674 = 5,638. This should equal working capital changes + other items. Working capital: 3,961 Provisions net: 803 - 1,521 = -718 Other: -927 - 355 = -1,282 Total: 3,961 - 718 - 1,282 = 1,961. Not 5,638. I'm making this too complicated. Let me use the simplest and most widely accepted definition for FFO in the context of credit ratios: FFO = Cash Flow From Operating Activities + Working Capital Changes (if WC increased) - Working Capital Changes (if WC decreased) Or: FFO = CFO - ΔWC Where if WC is a source of cash (decrease), we subtract it from CFO to get FFO. If "Increase Decrease In Working Capital" of 3,961 represents a decrease in working capital (source of cash), then: FFO = 8,674 - 3,961 = 4,713 But this seems too low. Let me check if maybe the sign is opposite. Actually, I realize now that in some presentations, "Increase Decrease In Working Capital" as a positive number means working capital INCREASED (use of cash). Let me verify with components: - Inventories: -2,166. If this is shown as negative in the cash flow statement, it means use of cash (increase in inventories). - Receivables: -2,783. Negative means use of cash. - Payables: +1,333. Positive means source of cash. If these are the adjustments to profit, then: - Inventory increase: negative adjustment - Receivable increase: negative adjustment - Payable increase: positive adjustment Net: -2,166 - 2,783 + 1,333 = -3,616. This is negative, meaning net use of cash from these three. But the total "Increase Decrease In Working Capital" is +3,961. So other items must be strongly positive. Contract assets: +15 (positive, source) Contract liabilities: +254 (positive, source) Other assets/liabilities: +614 and +783 (positive) Sum of these: 15 + 254 + 614 + 783 = 1,666 Total so far: -3,616 + 1,666 = -1,950. Still negative. I need to include provisions maybe? Or the "Increase Decrease In Working Capital" includes different items than I listed. Actually, looking more carefully, I see "Adjustments For Decrease Increase In Other Assets Liabilities" = 614, and "Related Parties Member" = 783. These might be separate or combined. Let me try: 614 + 783 = 1,397 for other assets/liabilities. Hmm, I also see "Adjustments For Accruals To Provisions" = 803 and "Adjustments For Utilization From Provisions" = -1,521. These might be part of working capital or separate. If I include provisions: -1,950 + 803 - 1,521 = -2,668. Still negative. There must be other items I'm missing, or the "Increase Decrease In Working Capital" of 3,961 is not the sum of these components but a different calculation. Actually, re-reading the data, I see "Increase Decrease In Working Capital" is a separate line item, and then there are separate lines for provisions, interest, taxes, etc. So the 3,961 might be just the working capital subtotal, and provisions are separate. Given my difficulty in reconciling, let me just use the direct approach: FFO = Cash Flow From Operating Activities - Increase Decrease In Working Capital = 8,674,000,000 - 3,961,000,000 = 4,713,000,000 EUR But wait - I want to check if this should be plus or minus. If "Increase Decrease In Working Capital" is positive and represents a source of cash (decrease in WC), then to get FFO (before this source), we subtract it from CFO. However, if the positive 3,961 represents a use of cash (increase in WC, but presented as positive for some reason), then we add it back. Given the component analysis where inventory and receivables clearly increased (use of cash), and the net was presented as positive 3,961, I think there might be strong decreases in other working capital items or the presentation is different than I think. Let me try the opposite: FFO = CFO + Working Capital Changes = 8,674 + 3,961 = 12,635,000,000 EUR Or, using another common definition: FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash From continuing operations: - Net Income: 5,218 - D&A: 8,809 - Other non-cash items: impairment 1,288, other adjustments FFO ≈ 5,218 + 8,809 + 1,288 = 15,315 This is closer to 12,635 or 14,312 than to 4,713. Actually, let me look at this from a practical standpoint. For a utility like Enel with 140 billion revenue and 11 billion operating profit, FFO should be substantial, likely in the 15-20 billion range. Let me use: FFO = EBIT + D&A - Cash Taxes + Interest Received - Interest Paid = 11,193 + 8,809 - 1,934 + 2,622 - 5,016 = 15,674,000,000 EUR Or simpler: FFO = EBITDA - Cash Taxes - Net Interest Paid = 18,640 - 1,934 - 2,394 = 14,312,000,000 EUR Wait, I need to check if D&A in EBITDA should be 7,447 or 8,809. The income statement shows 7,447 for "Depreciation Amortisation And Impairment Loss Reversal". The cash flow shows 8,809 for "Depreciation And Amortisation Expense And Impairment Loss Reversal". The difference (8,809 - 7,447 = 1,362) might be due to different scope or classification. Let me use the cash flow version as it's more comprehensive. Actually, I realize the 7,447 might be the net amount in P&L, while 8,809 includes additional items. Let me use 8,809 for cash flow purposes. EBITDA = EBIT + D&A = 11,193 + 8,809 = 20,002? No wait, EBIT already excludes D&A, so: EBITDA = EBIT + D&A = 11,193 + 7,447 (from IS) = 18,640 Or if we use cash flow D&A: 11,193 + 8,809 = 20,002. But this might double count if some of 8,809 is not in operating profit. Actually, looking at operating expense: 131,689. If this includes D&A of 7,447, then cash operating costs = 124,242. EBITDA = Revenue + Commodity - Cash operating costs = 140,517 + 2,365 - 124,242 = 18,640. Yes. So EBITDA = 18,640,000,000 EUR. Now for FFO, I'll use: FFO = EBITDA - Cash Taxes = 18,640 - 1,934 = 16,706,000,000 EUR Or with interest: 16,706 - 5,016 + 2,622 = 14,312,000,000 EUR Actually, I think the most standard definition for FFO/Net Debt ratio is: FFO = Funds From Operations = Net Income + Depreciation + Amortization + Deferred Taxes + Other Non-Cash Items From cash flow statement, this equals roughly: FFO = CFO + Working Capital Changes - Interest Paid + Interest Received + Cash Taxes - Tax Expense Let me try: FFO = 8,674 + 3,961 - 5,016 + 2,622 + 1,934 - 3,470 = 8,705? No this is messy. Let me use a cleaner approach. I'll define FFO as: FFO = Operating Cash Flow before Working Capital Changes = CFO - WC changes But I need to determine the sign. Let me assume "Increase Decrease In Working Capital" of 3,961 is the net change. If it's positive and means WC decreased (source), then: FFO = CFO - source = 8,674 - 3,961 = 4,713 If it means WC increased (use), then: FFO = CFO + use = 8,674 + 3,961 = 12,635 Given the components show inventory and receivables increased (use of cash), but the total is positive, I think there must be larger decreases elsewhere, or the sign convention is different. Let me try yet another approach. I'll calculate FFO as: FFO = Profit Loss From Operating Activities + Depreciation Amortisation And Impairment Loss Reversal - Cash Taxes = 11,193 + 7,447 - 1,934 = 16,706,000,000 EUR This is EBIT + D&A - Cash Taxes, which is a common FFO definition. Or including interest: FFO = 16,706 + 2,622 - 5,016 = 14,312,000,000 EUR I think for the FFO/Net Debt ratio, the standard is to use FFO before net interest but after cash taxes, or sometimes after all interest and taxes. Let me check what Net Debt is. Net Debt = Long-term Borrowings + Short-term Borrowings + Current Portion of Long-term Borrowings - Cash and Cash Equivalents From data 2022 (end of year, i.e., 2023-01-01): - Longterm Borrowings: 68,191,000,000 - Shortterm Borrowings: 18,392,000,000 - Current Portion Of Longterm Borrowings: 2,835,000,000 - Cash And Cash Equivalents: 11,041,000,000 Gross Debt = 68,191 + 18,392 + 2,835 = 89,418,000,000 Net Debt = 89,418 - 11,041 = 78,377,000,000 EUR Or using 2021 year-end (2022-01-01) for 2022 beginning balance: - Longterm Borrowings: 54,500,000,000 - Shortterm Borrowings: 13,306,000,000 - Current Portion Of Longterm Borrowings: 4,031,000,000 - Cash And Cash Equivalents: 8,858,000,000 Gross Debt = 54,500 + 13,306 + 4,031 = 71,837,000,000 Net Debt = 71,837 - 8,858 = 62,979,000,000 EUR For 2022 ratio, we typically use average net debt or year-end net debt. Let me use year-end 2022 (which is 2023-01-01 in the data): 78,377,000,000. Or we could use average: (62,979 + 78,377) / 2 = 70,678,000,000. Now for FFO, let me use the most common utility definition: FFO = Cash Flow From Operating Activities before Working Capital Changes I'll calculate this as: FFO = EBIT + D&A - Cash Taxes = 11,193,000,000 + 7,447,000,000 - 1,934,000,000 = 16,706,000,000 EUR Wait, I want to double check. Should I use 7,447 or 8,809 for D&A? The income statement line "Depreciation Amortisation And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 7,447. This is the expense recognized in P&L. The cash flow adjustment "Adjustments For Depreciation And Amortisation Expense And Impairment Loss Reversal Of Impairment Loss Recognised In Profit Or Loss" = 8,809. This is the add-back. Why the difference? The 8,809 might include additional amortization or impairment items not in the 7,447, or there might be different scope (e.g., including discontinued operations, or different classification). For FFO, I should use the cash flow add-back as it's more comprehensive: 8,809. So FFO = EBIT + D&A (cash flow) - Cash Taxes? But wait, EBIT already excludes D&A, so: FFO = EBIT + D&A - Cash Taxes = 11,193 + 8,809 - 1,934 = 18,068,000,000 EUR Or should it be: FFO = EBITDA - Cash Taxes = (EBIT + D&A from IS) - Cash Taxes = (11,193 + 7,447) - 1,934 = 16,706,000,000? I think the issue is whether to use income statement D&A or cash flow D&A. For consistency with EBIT, I should use the D&A that was deducted to get EBIT, which is 7,447. So EBITDA = 11,193 + 7,447 = 18,640 FFO = EBITDA - Cash Taxes = 18,640 - 1,934 = 16,706,000,000 EUR But we also need to consider interest. If FFO is "funds from operations" available to all providers of capital, it should be before interest. So FFO = 16,706,000,000. If FFO is after interest (available to equity and debt holders after interest), then: FFO = 16,706 - 5,016 + 2,622 = 14,312,000,000? No, interest paid is 5,016 and received is 2,622, so net interest paid is 2,394. FFO after interest = 16,706 - 2,394 = 14,312,000,000 EUR. Actually, I think for the FFO/Net Debt ratio, the standard is to use FFO before interest and after taxes, or sometimes after interest. Let me look at what makes sense. Net debt is 78,377. If FFO is 16,706, ratio = 0.213. If FFO is 14,312, ratio = 0.183. For a utility, FFO/Net Debt of around 20-25% is typical investment grade. Let me try yet another common definition: FFO = Cash Flow From Operating Activities + Interest Expense - Interest Income + Working Capital Changes - Tax Expense + Cash Taxes Actually, I think the most standard FFO for this ratio is: FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash Items - Gain on asset sales = 2,920 + 8,809 + (3,470 - 1,934) + other items - 355 Deferred taxes = tax expense - cash taxes = 3,470 - 1,934 = 1,536? Or from income statement: Income Tax Expense Continuing Operations = 3,523,000,000. Cash taxes paid = 1,934,000,000. Deferred = 3,523 - 1,934 = 1,589,000,000. FFO = 2,920 + 8,809 + 1,589 - 355 + other = 12,963 + other Other non-cash: impairment reversal 1,288, undistributed profits -23 (equity method), other -927, finance cost net 2,499 (accrual) Hmm, this is getting complicated. Let me use the cash flow approach. Actually, I think I've been overcomplicating this. Let me use the standard definition from S&P/Moody's for utilities: FFO = Cash Flow From Operating Activities before Changes in Working Capital From the cash flow statement: CFO = 8,674,000,000 Working capital change = 3,961,000,000 (positive, meaning source of cash) If WC decreased (source of 3,961), then FFO = CFO - 3,961 = 4,713,000,000? That seems too low. Wait, I think I need to check if "Increase Decrease In Working Capital" includes or excludes the provision items. Looking at the structure, provisions are listed separately after working capital. Let me recalculate: If WC change is -3,961 (use of cash, increase in WC), then FFO = CFO - (-3,961) = CFO + 3,961 = 12,635,000,000. But the line says "Increase Decrease In Working Capital" = 3,961, not -3,961. Hmm, let me look at the exact wording again. "Increase Decrease In Working Capital" - this is the name of the line item. The value is 3,961,000,000. In IFRS cash flow statements, this line typically shows the adjustment for the change. If working capital increased (use of cash), the adjustment is negative (subtracted from profit). If working capital decreased (source of cash), the adjustment is positive (added to profit). Given the value is positive 3,961, this means working capital DECREASED, providing cash. Therefore: CFO = Profit adjusted + 3,961 + other items And FFO (before WC changes) = Profit adjusted + other items = CFO - 3,961 = 8,674 - 3,961 = 4,713,000,000. But this still seems wrong because we also have provisions, interest, and taxes as separate items. Let me think about this differently. The cash flow statement structure is: 1. Start with profit 2. Add back non-cash items (D&A, impairment, etc.) 3. Adjust for working capital changes 4. Adjust for provisions 5. Adjust for interest and taxes 6. Get to CFO If I want FFO = step 2 result (before WC, provisions, interest, taxes), then: FFO = CFO - step 3 - step 4 - step 5 - step 6? No, that's not right either. Actually, let me look at what "Funds From Operations" truly means. It's the cash generated from operations before working capital changes and before interest and taxes, OR it's the cash available from operations after all operating adjustments. I think the most practical and widely used definition is: FFO = EBITDA - Cash Taxes Or for utilities with significant working capital needs: FFO = CFO + Working Capital Investments - Disposals Let me try a different approach. I'll use the definition from Moody's for utilities: FFO = Net Income + Depreciation + Amortization + Deferred Income Taxes + Other Non-Cash Items From the data: - Net Income (Profit Loss): 2,920,000,000 - Depreciation and Amortization (cash flow add-back): 8,809,000,000 - Deferred Taxes: Tax expense 3,523 - Cash taxes paid 1,934 = 1,589,000,000 - Other Non-Cash: Impairment reversal 1,288, Gains on disposal -355, Other -927, Undistributed profits -23, Finance cost accrual -2,499 Hmm, the "Other Non-Cash" items are tricky. Let me include impairment and exclude gains: Other Non-Cash = 1,288 - 355 - 927 = 6? That's small. Actually, let me include all non-cash adjustments from cash flow except D&A: - Impairment: 1,288 - Finance cost (accrual): -2,499 (this is net finance cost, not cash) - Undistributed profits: 23 - Income tax expense: 3,470 (accrual, not cash) - Other non-cash: -927 - Gains on disposal: -355 Net of these: 1,288 - 2,499 + 23 + 3,470 - 927 - 355 = 1,000 So FFO = 2,920 + 8,809 + 1,000 = 12,729,000,000? But this includes tax accrual not deferred taxes. Let me try: FFO = 2,920 + 8,809 + 1,589 (deferred taxes) + 1,288 (impairment) - 355 (gains) = 14,251,000,000 Or approximately 14,000,000,000 to 15,000,000,000. Given my various calculations range from 12,635 to 18,068, let me pick the most standard one. I'll use: FFO = Cash Flow From Operating Activities before Working Capital Changes And I'll interpret this as: FFO = CFO - WC change if WC is source, or CFO + WC change if WC is use. Given "Increase Decrease In Working Capital" = 3,961 and my analysis that inventory and receivables increased (use of cash), I think the net effect might actually be use of cash, and the positive sign is just presentation. Actually, let me re-examine. The components "Adjustments For Decrease Increase In Inventories" = -2,166. If the natural reading is "adjustment for decrease/increase", then a negative number might mean... In standard IFRS cash flow statements using the indirect method: - Increase in inventories: shown as negative adjustment (use of cash) - Decrease in inventories: shown as positive adjustment (source of cash) So "Adjustments For Decrease Increase In Inventories" = -2,166 means: the adjustment is negative 2,166, which corresponds to an INCREASE in inventories. Similarly, "Adjustments For Decrease Increase In Trade Account Receivable" = -2,783 means INCREASE in receivables. "Adjustments For Increase Decrease In Trade Account Payable" = +1,333 means INCREASE in payables (source of cash, positive adjustment). So far: inventory up (bad, -2,166), receivables up (bad, -2,783), payables up (good, +1,333). Net of these three: -3,616. For the total "Increase Decrease In Working Capital" to be +3,961, other items must be strongly positive. Let me see what else is in working capital: - Contract assets: +15 (positive, so decrease, good) - Contract liabilities: +254 (positive, so increase, good) - Other assets/liabilities: +614 and +783 (positive) Sum: 15 + 254 + 614 + 783 = 1,666 Total: -3,616 + 1,666 = -1,950. Still negative. Unless "Other Assets Liabilities" of 614 and 783 are both positive adjustments, meaning... let me check if there are more items. Actually, I see "Adjustments For Decrease Increase In Other Assets Liabilities" = 614, and "Related Parties Member" = 783. These might be separate line items or the same item split. If total other assets/liabilities is 614 + 783 = 1,397, then: -3,616 + 1,397 = -2,219. Still not close to +3,961. There must be other working capital items I haven't identified, or the "Increase Decrease In Working Capital" includes/excludes certain items. Given my inability to reconcile exactly, let me just use the reported total and make a reasonable assumption. I'll assume "Increase Decrease In Working Capital" = +3,961,000,000 represents a net source of cash (decrease in working capital), based on it being positive. Then FFO = CFO - WC source = 8,674 - 3,961 = 4,713,000,000 EUR. But this seems too low. Let me try the alternative: if the positive 3,961 is just the absolute value and the direction is indicated by "Increase" vs "Decrease" in the label... Actually, re-reading: "Increase Decrease In Working Capital" - this is the label. It doesn't specify which happened. The value is 3,961. In many financial databases, this line item is shown as positive when working capital increased (use of cash) and the cash flow statement shows it as a negative adjustment. But here the value is positive 3,961. Hmm, I think the value shown might already be the adjustment amount (positive = added to profit = source of cash = decrease in WC). Let me try yet another interpretation: The line "Increase Decrease In Working Capital" with value 3,961 is the CHANGE in working capital, not the adjustment. If it's positive, working capital increased by 3,961. This is use of cash, so the adjustment to profit is -3,961. Then CFO = Profit adjusted - 3,961 + other items = 8,674. And FFO (before WC changes) = Profit adjusted + other items = 8,674 + 3,961 = 12,635,000,000 EUR. This makes more sense! Let me verify with this interpretation. If WC increased by 3,961 (use of cash), then: - Adjustment to profit = -3,961 - CFO = FFO - 3,961 = 8,674 - FFO = 8,674 + 3,961 = 12,635,000,000 EUR This seems more reasonable for a utility of this size. Let me check if 12,635 is consistent with other calculations: - EBITDA = 18,640 - Cash taxes = 1,934 - Net interest = 2,394 - WC increase = 3,961 - Other items (provisions, etc.) = ? CFO = EBITDA - Cash taxes - Net interest - WC increase - Other 8,674 = 18,640 - 1,934 - 2,394 - 3,961 - Other 8,674 = 10,351 - Other Other = 1,677 From data: provisions net = 803 - 1,521 = -718, other non-cash = -927, gains = -355. Total: -718 - 927 - 355 = -2,000. Close to 1,677 with rounding or other items. Actually, this doesn't quite work. Let me try: 18,640 - 1,934 - 2,394 - 3,961 = 10,351. But CFO is 8,674. Difference is 1,677. Hmm, but I also need to include other items like provisions, other adjustments, etc. Let me not try to reconcile exactly. The key question is whether FFO = 12,635 or something else. Given that 12,635 = CFO + WC increase (if WC increased), this seems like a reasonable FFO figure. Actually, I realize I should check one more thing. Is "Increase Decrease In Working Capital" of 3,961 the change or the adjustment? Looking at other line items: - "Adjustments For Decrease Increase In Inventories" = -2,166. This is clearly the adjustment (negative = subtract from profit). - "Adjustments For Increase Decrease In Trade Account Payable" = +1,333. This is the adjustment (positive = add to profit). But "Increase Decrease In Working Capital" = 3,961. This doesn't have "Adjustments For" prefix. So it might be the net change in working capital, not the adjustment. If it's the net change (not the adjustment), then: - WC change = 3,961 (increase, use of cash) - Adjustment = -3,961 (subtract from profit) - CFO = FFO - 3,961 - FFO = CFO + 3,961 = 12,635,000,000 EUR This makes sense! The line without "Adjustments For" prefix is the change, not the adjustment. So FFO = 12,635,000,000 EUR. Now let me calculate Net Debt more carefully. At year-end 2022 (2023-01-01): - Longterm Borrowings: 68,191,000,000 - Shortterm Borrowings: 18,392,000,000 - Current Portion Of Longterm Borrowings: 2,835,000,000 - Cash And Cash Equivalents: 11,041,000,000 Gross Debt = 68,191 + 18,392 + 2,835 = 89,418,000,000 Net Debt = 89,418 - 11,041 = 78,377,000,000 EUR FFO / Net Debt = 12,635 / 78,377 = 0.1612 or 16.12% But wait, I should check if there are other debt items. Looking at current liabilities: - Current Derivative Financial Liabilities: 16,141,000,000 (these are derivatives, not debt) - Other Current Financial Liabilities: 853,000,000 Should I include other financial liabilities? Typically net debt includes: - Long-term borrowings - Short-term borrowings - Current portion of long-term debt - Less: Cash and cash equivalents - Sometimes less: short-term investments From the data, I see "Shortterm Investments Classified As Cash Equivalents" = 78,000,000 at 2023-01-01. These might be included in cash equivalents already, or additional. Looking at "Cash And Cash Equivalents" = 11,041,000,000 and "Shortterm Investments Classified As Cash Equivalents" = 78,000,000. These might be separate or combined. Actually, "Cash And Cash Equivalents Of Continuing Operations" = 11,041,000,000. Then there are also cash equivalents classified as held for sale and discontinued operations. Total cash and cash equivalents from balance sheet: 11,041,000,000 (this matches the main line item). For net debt, I'll use: Gross Debt - Cash and Cash Equivalents = 89,418 - 11,041 = 78,377,000,000. But should I include "Other Current Financial Liabilities" of 853? These might be debt-like. Let me check if they're borrowings. Looking at the data, "Other Current Financial Liabilities" = 853,000,000 with Related Parties 1,000,000. This might include some debt. However, standard net debt calculation typically uses: - Long-term borrowings - Short-term borrowings - Current portion of long-term borrowings I'll stick with 78,377,000,000 for net debt. FFO / Net Debt = 12,635 / 78,377 = 0.1612 But I want to double check my FFO calculation. Let me try another approach. From the cash flow statement, FFO is often calculated as: FFO = Cash Flow From Operating Activities + Increase in Working Capital - Decrease in Working Capital Or: FFO = CFO + WC use - WC source If WC increased by 3,961 (use of cash), then: FFO = CFO + 3,961 = 8,674 + 3,961 = 12,635. Yes. Alternatively, some define FFO as: FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash Let me verify: 2,920 + 8,809 + 1,589 + other = 13,318 + other. Close to 12,635. The difference might be due to gains/losses, provisions, and other items. Given the various approaches, I think 12,635,000,000 is a reasonable FFO figure. But wait - I want to reconsider whether I should use average net debt or year-end net debt. For ratios at a point in time, year-end is common. For coverage ratios over a period, average might be better. If I use average net debt: (62,979 + 78,377) / 2 = 70,678,000,000. FFO / Average Net Debt = 12,635 / 70,678 = 0.1788 or 17.88%. Hmm, but the question asks for "the FFO / Net debt ratio for 2022". This typically uses year-end 2022 net debt, which is the 2023-01-01 balance. Actually, let me reconsider the FFO calculation once more. I want to make sure I'm using the right definition. In many European utility annual reports, FFO is disclosed as: FFO = Cash flow from operating activities before changes in working capital This is also called "Cash generated from operations" or "Operating cash flow before working capital changes". From my calculation: FFO = 12,635,000,000 EUR. Let me also check if there's a more standard way. Some define FFO as: FFO = EBITDA - Cash Taxes - Net Interest Paid + Interest Received = 18,640 - 1,934 - 5,016 + 2,622 = 14,312,000,000 EUR This is different from 12,635. The difference is 1,677, which might be working capital or other items. Actually, I think the issue is that EBITDA - Cash Taxes gives pre-interest FFO, while CFO-based FFO includes interest and other items. Let me think about which FFO is used for FFO/Net Debt ratio. In credit analysis, FFO/Net Debt is a leverage ratio. FFO should represent funds available to service debt. So: - If FFO is before interest, then we compare to net debt (which includes interest-bearing debt) - The ratio shows how much cash flow is available relative to debt Typically, FFO for this ratio is after interest but before working capital changes, or sometimes before interest. Actually, looking at standard credit metrics: - FFO = Funds From Operations = Net Income + D&A + Deferred Taxes + Other Non-Cash - This is available to all providers of capital (equity and debt) - FFO / Net Debt shows coverage If FFO includes interest paid, then it's after interest. If not, it's before interest. From my CFO-based calculation of 12,635, this is after interest paid (5,016) and interest received (2,622), and after cash taxes (1,934). From EBITDA-based: 14,312 is before net interest (after cash taxes). I think for consistency with common practice, I'll use the CFO-based approach: FFO = CFO + WC increase = 8,674 + 3,961 = 12,635,000,000 EUR. But wait, I need to verify the sign of WC once more. Let me look at the exact cash flow impact. If working capital increased by 3,961 (more inventory, more receivables, etc.), this used cash. In the cash flow statement, this is shown as a negative adjustment to profit. But the line "Increase Decrease In Working Capital" shows +3,961. If this is the change (not the adjustment), then an increase is positive. The adjustment would be -3,961. CFO = Profit adjusted - 3,961 + other items = 8,674. FFO (before WC changes) = 8,674 + 3,961 = 12,635. Yes, this makes sense. Actually, I want to check one more thing. Is "Increase Decrease In Working Capital" the only WC-related item? Looking at the data, I also see provisions (accruals and utilization). Provisions are sometimes considered part of working capital, sometimes separate. If I include provisions in FFO calculation: Net provisions = 803 - 1,521 = -718 (use of cash) Then broader WC change = 3,961 + 718? = 4,679? Or is 3,961 already including provisions? Given the data structure, "Increase Decrease In Working Capital" and provisions are separate line items. So total pre-FFO adjustments might include both. If FFO = CFO + WC changes + provision changes = 8,674 + 3,961 + (-718) = 11,917,000,000? Hmm, but typically FFO excludes all working capital and provision changes. Let me think... Actually, I think the standard is: FFO = CFO - Changes in Working Capital - Changes in Provisions + Interest Paid - Interest Received - Cash Taxes + Tax Expense This gets back to the accrual-based FFO. Let me try a completely different approach. I'll use the direct definition from S&P: FFO = Net Income + Depreciation + Amortization + Deferred Taxes + Other Non-Cash Items = 2,920 + 8,809 + 1,589 + (1,288 - 355) = 14,251,000,000 EUR Where: - Net Income = 2,920 - D&A = 8,809 (from cash flow, most comprehensive) - Deferred Taxes = Tax expense 3,523 - Cash taxes 1,934 = 1,589. Or using continuing operations tax: 3,523 - 1,934 = 1,589. - Other Non-Cash = Impairment reversal 1,288 - Gains on disposal 355 = 933 FFO = 2,920 + 8,809 + 1,589 + 933 = 14,251,000,000 EUR This is close to my EBITDA-based calculation of 14,312. For Net Debt = 78,377,000,000. FFO / Net Debt = 14,251 / 78,377 = 0.1818 or 18.18%. Or if I use the CFO-based FFO of 12,635: 12,635 / 78,377 = 0.1612 or 16.12%. I need to decide which FFO to use. Let me think about what's most standard for this ratio. In practice, for utilities and in European markets, FFO is often calculated from the cash flow statement as: FFO = Cash Flow From Operating Activities + Working Capital Changes - Non-recurring items Or: FFO = Operating Cash Flow before Working Capital Changes Given the data, I'll use: FFO = 12,635,000,000 EUR (CFO + WC increase). But I want to check one more time. Let me see if 12,635 makes sense by working through the cash flow: Start: Profit Loss = 2,920 + D&A = 8,809 + Impairment = 1,288 + Tax expense (accrual) = 3,470 + Finance cost (accrual) = -2,499? (this is net, might be income minus expense) + Other = -927 + Undistributed profits = 23 - Gains on disposal = -355 Subtotal (FFO before interest and taxes): 2,920 + 8,809 + 1,288 + 3,470 - 2,499 - 927 + 23 - 355 = 12,729 Hmm, close to 12,635. The difference of 94 might be rounding or other items. Then: - WC increase 3,961 - Net provisions 718 - Cash taxes 1,934 - Interest paid 5,016 + Interest received 2,622 + Other = ? 12,729 - 3,961 - 718 - 1,934 - 5,016 + 2,622 = 3,722. Not 8,674. I'm clearly missing something. Let me not try to reconcile the exact cash flow. Given the complexity, let me use the most straightforward and widely accepted definition: FFO = EBITDA - Cash Taxes = 18,640,000,000 - 1,934,000,000 = 16,706,000,000 EUR Net Debt = 78,377,000,000 EUR FFO / Net Debt = 16,706 / 78,377 = 0.2131 or 21.31% But this is before interest, and net debt is interest-bearing. Should I subtract interest? If FFO = EBITDA - Cash Taxes - Net Interest Paid = 16,706 - 5,016 + 2,622 = 14,312,000,000. FFO / Net Debt = 14,312 / 78,377 = 0.1826 or 18.26%. I think for this ratio, the after-interest version is more appropriate because we're comparing to net debt (which requires interest payments). But actually, looking at standard practice, FFO is typically BEFORE interest, because the ratio is meant to show total cash generation available to service debt. The interest is already reflected in the net debt (which is the denominator). Hmm, but that doesn't make complete sense. If FFO is before interest, and we compare to debt, we're double counting the interest capacity. Actually, I think the standard is: - FFO = before interest (available to pay interest and principal) - Net Debt = debt that requires interest payments - FFO / Net Debt shows how many years of FFO it takes to pay off debt So FFO before interest is correct. Let me use: FFO = 16,706,000,000 EUR. But wait, I want to verify this against another common definition. FFO is also sometimes defined as: FFO = Operating Cash Flow - Working Capital Changes + Interest Paid - Interest Received + Cash Taxes - Tax Expense This should get us to the accrual-based FFO before interest and taxes. Actually, I think I'm overcomplicating this. Let me look for the simplest consistent definition. From Wikipedia and standard finance texts: FFO (Funds From Operations) = Net Income + Depreciation + Amortization - Gains on Sales of Property For REITs and utilities, this is common. But for corporate credit analysis, it's broader. Moody's definition: FFO = Net Income + Depreciation + Amortization + Deferred Taxes + Other Non-Cash Items Using this: - Net Income: 2,920 - D&A: 8,809 - Deferred Taxes: 1,589 (3,523 - 1,934, or from continuing operations 3,523 - 1,934) - Other Non-Cash: Let's use impairment 1,288 - gains 355 = 933 FFO = 2,920 + 8,809 + 1,589 + 933 = 14,251,000,000 EUR Net Debt = 78,377,000,000 EUR Ratio = 14,251 / 78,377 = 0.1818 Or if I exclude other non-cash and just use D&A and deferred taxes: FFO = 2,920 + 8,809 + 1,589 = 13,318,000,000 Ratio = 13,318 / 78,377 = 0.1699 Given the range of estimates (16.1% to 21.3%), I need to make a reasonable choice. Let me try one more approach. I'll look at what the cash flow statement implies for "Cash generated from operations before working capital changes". From the cash flow data, if I work backwards from CFO: CFO = 8,674 Add back: WC increase 3,961, Provisions use 718, Interest paid net 2,394, Cash taxes 1,934, Other items? Actually, let me try: FFO = CFO + WC increase + Provision increase + Other operating items - Interest paid + Interest received - Cash taxes + Tax expense This should equal: Net Income + D&A + Other non-cash = FFO (accrual based) Let me verify with approximate numbers: CFO 8,674 + WC 3,961 + Provisions (-718) - Interest paid 5,016 + Interest received 2,622 - Cash taxes 1,934 + Tax expense 3,470 + Other 927 - Gains 355 = ? 8,674 + 3,961 - 718 - 5,016 + 2,622 - 1,934 + 3,470 + 927 - 355 = 11,631 This should equal Net Income + D&A + Other non-cash = 2,920 + 8,809 + Other = 11,729 + Other. Close to 11,631. The difference might be due to my rough calculation. Hmm, 11,631 is close to my earlier CFO+WC of 12,635 minus some items. I think the cleanest FFO from this exercise is approximately 12,000,000,000 to 13,000,000,000. Let me settle on: FFO = 12,635,000,000 EUR (CFO + WC increase). Net Debt = 78,377,000,000 EUR. FFO / Net Debt = 12,635 / 78,377 = 0.1612. But I want to check if I should use a different net debt. Let me see if there are other borrowings or debt-like items. Looking at 2023-01-01 (end of 2022): - Longterm Borrowings: 68,191 - Shortterm Borrowings: 18,392 - Current Portion Of Longterm Borrowings: 2,835 - Total Borrowings: 89,418 Are there other debt items? - Noncurrent Derivative Financial Liabilities: 5,895 (these are derivatives, not debt) - Current Derivative Financial Liabilities: 16,141 (derivatives, not debt) - Other Current Financial Liabilities: 853 (might include some debt) - Noncurrent Contract Liabilities: 5,747 (not debt, deferred revenue) - Current Contract Liabilities: 1,775 (not debt) I'll exclude derivatives and contract liabilities as they're not interest-bearing debt. Net Debt = 89,418 - 11,041 = 78,377,000,000 EUR. One more check: should I include "Cash And Cash Equivalents Classified As Discontinued Operations" or "Held For Sale"? From data: - Cash And Cash Equivalents Of Continuing Operations: 11,041 - Shortterm Investments: 78 - Held For Sale: 98 - Discontinued Operations: 326 Total cash: 11,041 + 78 + 98 + 326 = 11,543? But the main line says 11,041. Actually, "Cash And Cash Equivalents" = 11,041. The other items might be separate classifications. Let me use 11,041 as it's the main line item for cash and cash equivalents. Actually, looking more carefully: "Cash And Cash Equivalents" 2023-01-01 = 11,041,000,000. This is the balance sheet line item. Then "Cash And Cash Equivalents Of Continuing Operations" = 11,041,000,000. Same number. Other cash items (investments, held for sale, discontinued) are separate. So Net Debt = 89,418 - 11,041 = 78,377,000,000. Now, final calculation: FFO / Net Debt = 12,635 / 78,377 = 0.1612 Or if I use FFO = 14,251 (Moody's style): 14,251 / 78,377 = 0.1818 Or if I use FFO = 16,706 (EBITDA - Cash Taxes): 16,706 / 78,377 = 0.2131 Given the range, I think the most standard for this ratio in utility sector is FFO = Operating Cash Flow before Working Capital Changes, which gives 12,635 / 78,377 = 0.161. But let me reconsider one more time. I want to check if "Increase Decrease In Working Capital" of 3,961 is indeed an increase (use of cash). Looking at the components again: - Inventories: -2,166 (negative adjustment = increase in inventory, use of cash) - Receivables: -2,783 (negative = increase, use of cash) - Payables: +1,333 (positive = increase, source of cash) If these are the main working capital items and they're net negative, but the total "Increase Decrease In Working Capital" is positive 3,961, there must be large positive items elsewhere. Looking at other potential WC items: - Contract assets: +15 (positive adjustment = decrease, source) - Contract liabilities: +254 (positive = increase, source... wait, increase in liabilities is source, so positive adjustment) - Other assets/liabilities: +614 and +783 Hmm, I need to think about "Adjustments For Increase Decrease In Contract Liabilities" = 254. If contract liabilities increased, this is deferred revenue, a source of cash, so positive adjustment. Yes. But even with all these: -2,166 - 2,783 + 1,333 + 15 + 254 + 614 + 783 = -1,950. Still negative. Unless there are other items I haven't identified, or the "Increase Decrease In Working Capital" of 3,961 is not the sum of these but a different calculation. Actually, re-reading the data, I see "Increase Decrease In Working Capital" is a separate line, and then individual working capital items are also listed separately. This suggests the individual items might be components, or they might be additional details. Let me check if "Increase Decrease In Working Capital" = 3,961 is the net of all WC items, and the individual lines are just breakdowns. If so, my component sum should equal 3,961, but it doesn't. Perhaps some items have different signs than I think. Let me re-examine "Adjustments For Decrease Increase In Inventories" = -2,166. The label says "Decrease Increase". If the value is -2,166, maybe this means: - Decrease: negative 2,166 (i.e., decrease of 2,166, which is source of cash, positive for cash flow) - Or: the adjustment is -2,166, meaning subtract 2,166 from profit I think the latter is correct: it's an adjustment to profit. Negative adjustment = subtract from profit = use of cash. But wait, the label "Decrease Increase" might indicate the natural direction. "Decrease" first, then "Increase". If value is negative, maybe it means decrease? Actually, I think the label is just describing what the line is about (decrease or increase in inventories), and the value is the adjustment. Negative = bad for cash = increase in inventories. Given my confusion, let me try a different approach. Let me assume "Increase Decrease In Working Capital" = 3,961 is the NET CHANGE in working capital (not the adjustment). If WC increased by 3,961, this is use of cash. Adjustment to profit = -3,961. CFO = FFO - 3,961. FFO = CFO + 3,961 = 12,635. If WC decreased by 3,961, this is source of cash. Adjustment to profit = +3,961. CFO = FFO + 3,961. FFO = CFO - 3,961 = 4,713. Which is more likely? Given the component items (inventory up, receivables up, payables up), the net effect on working capital is unclear without knowing magnitudes of all items. Inventory up: +2,166 (use) Receivables up: +2,783 (use) Payables up: +1,333 (source? or use?) Actually, increase in payables is source of cash (you're not paying suppliers, so cash stays with you). So payables up = good for cash. But in my earlier calculation, I had payables adjustment as +1,333. If this is added to profit (positive adjustment), then payables increase is source of cash. Yes. So: inventory up (use) -2,166, receivables up (use) -2,783, payables up (source) +1,333. Net of these three: -3,616 (use of cash). For total WC to be +3,961 (source), other items must provide +7,577. That's quite large. Contract assets down: +15 Contract liabilities up: +254 Other assets/liabilities: +614 and +783 Total: 1,666. Not enough. Unless there are other items I'm missing, or "Other Assets Liabilities" is larger. Actually, looking at "Adjustments For Decrease Increase In Other Assets Liabilities" = 614 and "Related Parties Member" = 783. These sum to 1,397. Hmm, still not enough. Wait, I also see "Adjustments For Decrease Increase In Contract Assets" = 15. This is positive, meaning decrease in contract assets (source of cash). And "Adjustments For Increase Decrease In Contract Liabilities" = 254. Positive, meaning increase in contract liabilities (source of cash, deferred revenue). And "Adjustments For Increase Decrease In Contract Liabilities" "Related Parties Member" = 31. So total contract liabilities adjustment = 254 + 31 = 285? Or are these separate? Actually, looking more carefully, the main line is 254 and Related Parties is 31. These might be separate or the 31 might be included in 254. Given the data structure with "Related Parties Member", I think 254 is total and 31 is the related party portion. Or they might be additive. Let me assume they're additive: contract liabilities = 254 + 31 = 285. Similarly, other assets/liabilities = 614 + 783 = 1,397. Total other WC items: 15 + 285 + 1,397 = 1,697. Total WC: -3,616 + 1,697 = -1,919. Still negative, not +3,961. I must be missing something or misinterpreting the data structure. Given this uncertainty, let me just use the reported total of 3,961 and assume it's correct. Given that 3,961 is positive and labeled "Increase Decrease In Working Capital", I'll interpret this as the net change. If it's positive, working capital increased by 3,961 (use of cash). Then FFO = CFO + 3,961 = 12,635. Actually, wait. I want to check one more thing. Is "Increase Decrease In Working Capital" of 3,961 part of the cash flow statement, or is it a note disclosure? Looking at the data, it's listed among the cash flow adjustments, between "Increase Decrease Through Change In Equity Of Subsidiaries" and "Adjustments For Accruals To Provisions". So it's part of the operating cash flow calculation. Given all this analysis, I'll use: FFO = 12,635,000,000 EUR Net Debt = 78,377,000,000 EUR FFO / Net Debt = 0.1612 But I want to round reasonably. Let me express as a percentage or decimal. Actually, I realize I should double-check my net debt calculation. Let me make sure I have the right year. The question asks for "2022". In the data: - 2022-01-01 to 2023-01-01 is the 2022 fiscal year - 2023-01-01 is the end of 2022 (year-end balance) - 2022-01-01 is the beginning of 2022 For ratios at end of 2022, I should use 2023-01-01 balances. Net Debt at 2023-01-01: - Longterm Borrowings: 68,191 - Shortterm Borrowings: 18,392 - Current Portion Of Longterm Borrowings: 2,835 - Cash And Cash Equivalents: 11,041 Gross Debt = 68,191 + 18,392 + 2,835 = 89,418 Net Debt = 89,418 - 11,041 = 78,377 Wait, I should check if there are other debt-like items. What about "Other Current Financial Liabilities" of 853? Or "Noncurrent Contract Liabilities"? Contract liabilities are deferred revenue, not debt. Other current financial liabilities might include some short-term debt or commercial paper not classified as borrowings. However, "Shortterm Borrowings" of 18,392 likely captures most short-term debt. The 853 of other current financial liabilities is relatively small. I'll stick with standard definition: borrowings minus cash. One more check: should I include "Noncurrent Derivative Financial Liabilities" or "Current Derivative Financial Liabilities"? These are fair value of derivatives, not principal amounts. Typically excluded from net debt. Final answer: FFO / Net Debt = 12,635 / 78,377 = 0.1612. Let me also consider if I should use average net debt. For 2022 performance, average might be more appropriate: Average Net Debt = (62,979 + 78,377) / 2 = 70,678 FFO / Average Net Debt = 12,635 / 70,678 = 0.1788. I think year-end is more common for this ratio, so I'll use 0.161. Actually, let me reconsider my FFO one more time. I want to see if there's a more standard approach. From the cash flow statement, "Cash Flows From Used In Operating Activities" = 8,674. The term "From Used In" suggests this is the net result (positive = inflow, negative = outflow). Since it's positive 8,674, this is cash generated from operations. FFO is typically this amount BEFORE working capital changes. So: FFO = 8,674 + Working capital use - Working capital source If "Increase Decrease In Working Capital" = 3,961 represents a use of cash (increase in WC), then: FFO = 8,674 + 3,961 = 12,635. If it represents a source of cash (decrease in WC), then: FFO = 8,674 - 3,961 = 4,713. Given my component analysis showed inventory and receivables increased (use of cash), and the total is 3,961, I think the most consistent interpretation is that WC increased by 3,961 (use of cash). The positive sign in the database might just be the absolute value or a different presentation convention. Therefore: FFO = 8,674 + 3,961 = 12,635,000,000 EUR. FFO / Net Debt = 12,635 / 78,377 = 0.1612. Let me round to a reasonable precision: 0.16 or 16.1%. Actually, looking at this again, I want to verify if 12,635 is in the right ballpark. For Enel, a major utility with 140 billion revenue and 11 billion operating profit, FFO of 12.6 billion seems reasonable (roughly 9% of revenue, or slightly more than operating profit). Net debt of 78 billion is about 56% of revenue, which is typical for a capital-intensive utility. FFO/Net Debt of 16% is reasonable for a BBB-rated utility. I'll go with: FFO / Net Debt = 0.161 or 16.1%. Expressed as a ratio: 0.161. Let me also try the calculation with FFO = 14,251 (Moody's definition): 14,251 / 78,377 = 0.182. Or with EBITDA - Cash Taxes = 16,706: 16,706 / 78,377 = 0.213. Given the range, I think 0.16 to 0.18 is most likely. The exact definition of FFO varies. For this exercise, I'll use the cash flow based FFO before working capital changes: 12,635 / 78,377 = 0.161. Final check: Should I express as percentage or decimal? The question says "ratio", so decimal is fine. 0.161