# FFO / Net Debt Ratio Calculation for ERG S.p.A. (2022)

## S&P FFO Methodology

FFO (Funds From Operations) under S&P methodology is calculated as:
**FFO = Net Income + Depreciation + Amortization - Changes in Working Capital (adjusted)**

Or more commonly:
**FFO = Operating Cash Flow + Interest Paid - Operating adjustments**

A simpler approach used by S&P:
**FFO = Net Income + Depreciation + Amortization + Impairment Losses (net)**

## Calculation for 2022 (period 2022-01-01 to 2023-01-01)

### FFO Components:

1. **Profit Loss Attributable to Owners of Parent**: €378,939,000
2. **Depreciation Expense**: €176,689,000
3. **Amortisation Expense**: €58,741,000
4. **Impairment Loss Reversal (net)**: €43,185,000 (reversal, so negative adjustment)

**FFO = 378,939 + 176,689 + 58,741 - 43,185 = €571,184,000**

### Net Debt Calculation:

**Net Debt = Total Debt - Cash and Cash Equivalents**

#### Total Debt Components:
- Other Noncurrent Financial Liabilities: €1,751,255,000
- Noncurrent Financial Liabilities at Fair Value: €0
- Noncurrent Lease Liabilities: €150,955,000
- Other Current Financial Liabilities: €389,716,000
- Current Financial Liabilities at Fair Value: €76,644,000
- Current Lease Liabilities: €6,362,000

**Total Debt = 1,751,255 + 0 + 150,955 + 389,716 + 76,644 + 6,362 = €2,374,932,000**

#### Less: Cash and Cash Equivalents
- Cash and Cash Equivalents (2023-01-01): €392,811,000

**Net Debt = 2,374,932 - 392,811 = €1,982,121,000**

### FFO / Net Debt Ratio:

**Ratio = €571,184,000 / €1,982,121,000 = 0.288 or 28.8%**

<answer>0.288</answer>