# Analysis of VERBUND AG's Adjusted Leverage Trend (2022)

## Step 1: Calculate Net Debt for 2022 and 2023

**As of 2022-01-01 (end of 2021):**
- Cash and Cash Equivalents: €318,562,000
- Current Financial Liabilities: €1,462,453,000
- Noncurrent Financial Liabilities: €1,834,155,000
- Total Financial Liabilities: €3,296,608,000
- Net Debt = €3,296,608,000 - €318,562,000 = €2,978,046,000

**As of 2023-01-01 (end of 2022):**
- Cash and Cash Equivalents: €409,252,000
- Current Financial Liabilities: €1,109,297,000
- Noncurrent Financial Liabilities: €2,844,559,000
- Total Financial Liabilities: €3,953,856,000
- Net Debt = €3,953,856,000 - €409,252,000 = €3,544,604,000

## Step 2: Identify EBITDA Values

- EBITDA 2021-01-01 to 2022-01-01 (FY 2021): €1,578,959,000
- EBITDA 2022-01-01 to 2023-01-01 (FY 2022): €3,160,679,000

## Step 3: Calculate Net Debt / EBITDA Ratios

**For 2021 (position at 2022-01-01):**
Net Debt / EBITDA = €2,978,046,000 / €1,578,959,000 = **1.89x**

**For 2022 (position at 2023-01-01):**
Net Debt / EBITDA = €3,544,604,000 / €3,160,679,000 = **1.12x**

## Step 4: Calculate the Year-on-Year Gap

Gap = 1.89x - 1.12x = **0.77x**

## Step 5: Assess Against S&P Criteria

Per the definition provided:
- **Improving**: Gap < 0.3x (ratio decreases)
- **Stable**: Gap between ±0.3x
- **Deteriorating**: Gap > 0.3x (ratio increases)

The calculated gap of 0.77x **exceeds 0.3x**, indicating a significant year-on-year improvement in the leverage ratio (from 1.89x to 1.12x). This improvement is driven by:
1. EBITDA growth of 100% (from €1.58B to €3.16B) due to exceptional energy prices
2. Modest increase in net debt (18.9%)

While the leverage ratio improved, the magnitude of the change (0.77x) exceeds the ±0.3x threshold for "Stable."

<answer>Improving</answer>