# Reasoning To assess the adjusted leverage trend for 2022, I need to calculate the Net Debt / EBITDA ratio for 2022 and 2023, then compare the change. ## Step 1: Calculate EBITDA for 2022 and 2023 EBITDA = Operating Profit + Depreciation & Amortization + Impairment/Reversal **For 2023 (year ending 2023-01-01):** - Profit from Operating Activities: 1,872 million EUR - Depreciation and Amortization Expense: 2,228 million EUR - Depreciation Right-of-use Assets: 446 million EUR - Impairment Loss/Reversal: 172 million EUR EBITDA 2023 = 1,872 + 2,228 + 446 + 172 = **4,718 million EUR** **For 2022 (year ending 2022-01-01):** - Profit from Operating Activities: 1,733 million EUR - Depreciation and Amortization Expense: 2,065 million EUR - Depreciation Right-of-use Assets: 353 million EUR - Impairment Loss/Reversal: 405 million EUR EBITDA 2022 = 1,733 + 2,065 + 353 + 405 = **4,556 million EUR** ## Step 2: Calculate Net Debt **Net Debt 2023:** 7,440 million EUR (provided) **Net Debt 2022:** 941 million EUR (provided) ## Step 3: Calculate Net Debt / EBITDA Ratios **2023:** 7,440 / 4,718 = **1.58x** **2022:** 941 / 4,556 = **0.21x** ## Step 4: Calculate Year-on-Year Change Gap = 1.58x - 0.21x = **1.37x** ## Step 5: Apply the Definition The definition states: - **Improving:** gap < 0.3x (ratio improving) - **Stable:** gap between ±0.3x - **Deteriorating:** gap > 0.3x (ratio deteriorating) The gap is 1.37x, which is significantly greater than 0.3x, indicating a substantial deterioration in the Net Debt / EBITDA ratio year-on-year. This deterioration is driven by: 1. **Net Debt increased dramatically:** from 941 million EUR to 7,440 million EUR (a 690% increase), primarily due to significant M&A activity in 2022-2023 (cash used in obtaining control of subsidiaries: 6,269 million EUR) 2. **EBITDA remained relatively stable:** only increased from 4,556 to 4,718 million EUR (+3.6%) The combination of substantially higher net debt with only modest EBITDA growth clearly indicates a deteriorating leverage profile. Deteriorating