I need to estimate the FFO / Net debt ratio for 2022 based on S&P methodology. First, let me understand S&P's FFO (Funds From Operations) methodology. S&P typically calculates FFO as: - Net income + Depreciation and amortization + Impairment losses - Gains on asset sales / + losses on asset sales +/- Other non-cash items - Interest income + Interest expense - Tax on operating activities (or adjustments for tax) More specifically for utilities, S&P's FFO is typically: - Profit/Net income + Depreciation and amortization +/- Other non-cash items (impairments, provisions changes, etc.) - Interest income + Interest expense - Tax paid (or income tax expense) Let me work with a more standard S&P approach: FFO = Net income + D&A + Impairment losses (net of reversals) + Other non-cash adjustments - Interest income + Interest expense - Tax + Other adjustments Actually, let me use a cleaner S&P methodology. S&P Global Ratings typically defines FFO for utilities as: FFO = Funds from operations = Net income before extraordinary items + Depreciation & amortization + Deferred income taxes + Other non-cash items Or more practically for European utilities: FFO = EBIT + D&A - Cash taxes - Interest paid (or + Interest expense - Interest income adjustments) Let me use the most common S&P approach: FFO = Net income + D&A + Net impairment losses + Other non-cash items - Interest income + Interest expense - Tax benefits + Changes in working capital (sometimes excluded) Actually, the standard S&P FFO formula is: FFO = Net income + Depreciation & amortization + Deferred taxes + Other non-cash items - Gain on sale of assets + Loss on sale of assets - Interest income + Interest expense Let me calculate step by step for 2022 (period 2022-01-01 to 2023-01-01): Starting with Net Income (Profit Loss): 1,948,767,000 EUR Add back: - Depreciation and Amortisation Expense: 462,694,000 EUR - Impairment Loss: 197,761,000 EUR - Less: Reversal of Impairment Loss: -125,973,000 EUR - Net impairment: 197,761,000 - 125,973,000 = 71,788,000 EUR Other adjustments from cash flow statement: - "Depreciation And Amoritisation Of Property Plant And Equipment And Intangible Assets Net Of Reversals Of Impairment Losses": 534,483,000 EUR - "Impairment Losses On Investments Net Of Reversals Of Impairment Losses": -11,833,000 EUR - "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method": -17,259,000 EUR - "Adjustments For Losses Gains On Disposal Of Noncurrent Assets": 4,914,000 EUR - "Change In Noncurrent Provisions And Deferred Tax Liabilities": 35,247,000 EUR - "Change In Contributions To Building Costs And Grants": 2,782,000 EUR - "Other Adjustments For Noncash Items": 31,340,000 EUR Let me use the subtotal from operating cash flow which already includes many adjustments: "Subtotal" (before working capital changes): 2,516,130,000 EUR This subtotal in the cash flow statement typically represents: Net income + D&A + Impairments + Other non-cash items - interest income + interest expense - taxes paid + other adjustments Actually, let me look more carefully. The subtotal of 2,516,130,000 EUR is before working capital changes but after various adjustments. For S&P FFO, I need to add back interest and tax adjustments. Let me think about this differently. Standard S&P FFO calculation: FFO = Net income from continuing operations + Depreciation and amortization + Other non-cash charges (impairments, provisions, etc.) + Deferred income taxes - Interest income + Interest expense - Gain on sale of assets + Loss on sale of assets From the data: - Profit Loss: 1,948,767,000 EUR + Depreciation and Amortisation Expense: 462,694,000 EUR + Impairment Loss (net of reversal): 197,761,000 - 125,973,000 = 71,788,000 EUR + Other non-cash from cash flow (undistributed profits, gains/losses, provisions, etc.): - Adjustments For Undistributed Profits: -17,259,000 - Adjustments For Losses Gains On Disposal: 4,914,000 - Change In Noncurrent Provisions And Deferred Tax Liabilities: 35,247,000 - Change In Contributions To Building Costs And Grants: 2,782,000 - Other Adjustments For Noncash Items: 31,340,000 - Impairment Losses On Investments Net: -11,833,000 Subtotal of these other items: 44,191,000 EUR Interest and tax adjustments: - Interest Expense: 101,703,000 EUR - Interest Income: -40,132,000 EUR (revenue from interest, but this is income so subtract) - Finance income/cost adjustments Actually, for S&P FFO, we typically use: FFO = Net income + D&A + Interest expense - Interest income + Tax expense (or use EBIT + D&A - Cash taxes) Let me try: EBIT + D&A - Cash taxes But we don't have EBIT directly. We have Profit Loss From Operating Activities: 2,626,196,000 EUR This is essentially EBIT. Then: + D&A: 462,694,000 EUR - Taxes paid: 343,100,000 EUR (from cash flow) - Interest paid: 36,100,000 EUR (from cash flow) + Interest received: 6,100,000 EUR Wait, that's not right either. Let me reconsider. S&P FFO is typically: FFO = Net income + D&A + Deferred tax + Other non-cash - Interest income + Interest expense Or: FFO = Operating cash flow before working capital changes - Interest paid + Interest received (sometimes) + Tax paid Let me use: FFO = "Subtotal" from cash flow (which is before working capital but after various adjustments) + Interest paid - Interest received + some tax adjustments Actually, looking at the cash flow statement structure: - Subtotal: 2,516,130,000 EUR (this is after non-cash adjustments but before working capital) - Then working capital adjustments - Then: Interest paid, Interest received, Dividends received, Income taxes paid - Cash Flows From Used In Operating Activities: 2,019,859,000 EUR For S&P FFO, a common approach is: FFO = Cash flow from operations before working capital changes + Interest paid - Interest received (if interest received is classified as investing, keep it out) Actually, standard S&P FFO for utilities: FFO = Funds from operations = Net income + D&A + Deferred income taxes + Other non-cash items Let me calculate more directly using the income statement approach: Net income: 1,948,767,000 + D&A: 462,694,000 + Net impairment losses: 71,788,000 (197,761 - 125,973) + Other non-cash items from cash flow adjustments: - Undistributed profits of equity method investments: -17,259,000 (this is a negative adjustment, so it was added back to get to subtotal, meaning it reduced net income - so for FFO we need to add it back? No, this is already in net income) Let me reconsider. The cash flow subtotal of 2,516,130,000 starts from net income and adds back various items. From the cash flow adjustments listed: - Depreciation And Amoritisation...: 534,483,000 - Impairment Losses On Investments Net: -11,833,000 - Adjustments For Undistributed Profits: -17,259,000 - Adjustments For Losses Gains On Disposal: 4,914,000 - Change In Noncurrent Provisions And Deferred Tax Liabilities: 35,247,000 - Change In Contributions To Building Costs And Grants: 2,782,000 - Other Adjustments For Noncash Items: 31,340,000 Sum of these: 534,483,000 - 11,833,000 - 17,259,000 + 4,914,000 + 35,247,000 + 2,782,000 + 31,340,000 = 579,674,000 But subtotal is 2,516,130,000 and net income is 1,948,767,000 Difference: 2,516,130,000 - 1,948,767,000 = 567,363,000 Hmm, there's a discrepancy. Let me check: 579,674,000 vs 567,363,000. The difference might be due to share of profit of associates and other items. Actually, looking more carefully at the income statement: Profit Loss From Operating Activities (EBIT): 2,626,196,000 Less: Share Of Profit Loss Of Associates: 4,293,000 Less: Other Income Expense From Subsidiaries: 8,013,000 Less: Interest Income: 40,132,000 Plus: Interest Expense: 101,703,000 Plus/Minus: Other Finance items = Profit Before Tax: 2,532,119,000? Let me check: 2,626,196 + 101,703 - 40,132 - 4,293 - 8,013 = 2,675,461... that doesn't match. Wait: Profit Loss From Operating Activities: 2,626,196,000 Share Of Profit Loss: 4,293,000 (positive = profit, so subtract) Other Income Expense: 8,013,000 (positive = income, so subtract? or add?) Revenue From Interest: 40,132,000 Interest Expense: 101,703,000 Other Finance Income Cost: 1,642,000 Wertminderungen: 46,455,000 Wertaufholungen: 0 Finance Income Cost: -94,077,000 Let me try: 2,626,196 - 4,293 - 8,013 + 40,132 - 101,703 + 1,642 - 46,455 + 0 - 94,077... no that's getting messy. Actually "Finance Income Cost" of -94,077,000 seems to be the net finance result. 2,626,196 + (-94,077) = 2,532,119 which matches Profit Loss Before Tax? No, Profit Loss Before Tax is 2,532,119,000. Yes! 2,626,196 - 94,077 = 2,532,119. ✓ So Finance Income Cost = -94,077,000 is the net of all finance items. For S&P FFO, I need to work from Net Income and add back non-cash items and financing items. Standard S&P FFO = Net Income + D&A + Interest Expense + Other non-cash charges - Interest Income (or use net interest) + Deferred taxes Let me use a practical approach: FFO = Net Income + D&A + Interest Expense - Interest Income + Net Impairments + Other non-cash items + Tax expense (since we want pre-tax FFO essentially, or keep it after tax) Actually, S&P FFO is typically after-tax but before financing costs: FFO = Net Income + D&A + Interest Expense - Interest Income + Other non-cash items Or: FFO = EBIT + D&A - Cash Taxes Let me use: FFO = Profit Loss From Operating Activities + D&A - Cash Taxes + Interest adjustments Actually, the most standard S&P formula for FFO is: FFO = Net income before extraordinary items + Depreciation & amortization + Deferred income taxes + Other non-cash items For European companies, S&P often uses: FFO = Operating cash flow before working capital changes + Interest paid - Interest received (if interest received is operating) From cash flow: Subtotal (before working capital, after non-cash adjustments): 2,516,130,000 This includes various adjustments but not yet working capital, interest, or taxes. Then the cash flow shows: - Income Taxes Paid: 343,100,000 - Interest Paid: 36,100,000 - Interest Received: 6,100,000 - Dividends Received: 29,900,000 Cash Flows From Used In Operating Activities: 2,019,859,000 So: 2,516,130,000 - 73,079,000 (inventories) - 192,271,000 (receivables) + 339,687,000 (payables) + 548,678,000 (derivatives assets) - 1,360,527,000 (derivatives liabilities) + 241,241,000 (provisions and tax liabilities) = ? Let me verify: 2,516,130 - 73,079 - 192,271 + 339,687 + 548,678 - 1,360,527 + 241,241 = 2,019,859. Yes! ✓ For S&P FFO, I want to add back interest paid and subtract interest received (since FFO is before financing): FFO ≈ Cash Flow From Operations + Interest Paid - Interest Received + Tax Paid (since FFO is pre-tax or we adjust) Actually, standard approach: FFO = Net Income + D&A + Interest Expense - Interest Income + Other non-cash items Or from operating cash flow: FFO = CFO + Interest Paid - Interest Received (if interest received is operating) - Tax Paid + Tax Expense Let me use the direct approach: FFO = Net Income + D&A + Interest Expense - Interest Income + Net Impairments + Other non-cash adjustments From income statement: - Net Income: 1,948,767,000 + D&A: 462,694,000 + Interest Expense: 101,703,000 - Interest Income: 40,132,000 + Net Impairment (197,761 - 125,973): 71,788,000 But I need to be careful about what's already in net income. Actually, let me use the cash flow subtotal approach which is cleaner: The subtotal of 2,516,130,000 is essentially: Net Income + all non-cash adjustments (D&A, impairments, undistributed profits, gains/losses, provisions, etc.) For S&P FFO, I need to adjust this for interest and taxes to get a pre-financing, pre-tax measure, or keep it as is and adjust. Standard S&P FFO = Subtotal (before working capital) + Interest Paid - Interest Received + Tax Paid - Dividends Received (if equity method) Wait, let me check S&P's specific methodology. For utilities, S&P typically calculates: FFO = Funds from operations = Net income + D&A + Deferred taxes + Other non-cash items And FFO interest coverage = FFO / Gross Interest Expense For FFO/Net Debt, they use FFO as above and compare to net debt. Actually, for the FFO/Net Debt ratio, S&P uses: FFO = Net income from continuing operations + Depreciation & amortization + Deferred income taxes + Other non-cash items Let me calculate this carefully: Net Income: 1,948,767,000 + D&A: 462,694,000 + Deferred Tax: ? (we have Deferred Tax Assets: 35,811,000 to 35,839,000, small change; and Deferred Tax Liabilities: 486,851,000 to 800,452,000, increase of 313,601,000) Actually from cash flow: "Change In Noncurrent Provisions And Deferred Tax Liabilities": 35,247,000 - this includes deferred tax changes. Let me use the cash flow approach which is more reliable: FFO = Cash Flow From Operations before working capital changes + Interest Paid - Interest Received + Tax Paid Wait, that's not quite right either. Let me try: FFO = EBIT + D&A - Cash Taxes EBIT = Profit Loss From Operating Activities = 2,626,196,000? No wait, this might include associates. Actually "Profit Loss From Operating Activities" in IFRS often means EBIT. Let me assume this is EBIT: 2,626,196,000 Then EBIT + D&A - Cash Taxes = 2,626,196,000 + 462,694,000 - 343,100,000 = 2,745,790,000 But this double counts D&A if EBIT already excludes it. Yes, EBIT is before D&A, so EBIT + D&A is wrong. Actually, EBIT typically excludes D&A (it's operating profit, not EBITDA). So: EBITDA = EBIT + D&A = 2,626,196,000 + 462,694,000 = 3,088,890,000 FFO = EBITDA - Cash Taxes = 3,088,890,000 - 343,100,000 = 2,745,790,000? But we need to subtract interest to get to FFO? No, FFO is before interest. Actually S&P FFO = EBITDA - Cash Taxes - Cash Interest Paid? No, FFO is typically after interest but can be before. Let me use the most common S&P definition: FFO = Net Income + D&A + Deferred Income Tax + Other Non-Cash Items From the cash flow subtotal, we have 2,516,130,000 which is Net Income + various non-cash adjustments. To get to S&P FFO, I should add back interest expense and subtract interest income (to get pre-interest), or keep as is for post-interest FFO. For FFO/Net Debt ratio, S&P typically uses FFO before interest (i.e., ability to service debt): FFO = Net Income + D&A + Interest Expense - Interest Income + Tax Expense + Other non-cash items Or equivalently: EBITDA - Tax Expense + Other non-cash items Let me calculate: EBITDA: 3,160,679,000 (given directly) - Tax Expense: 583,352,000 = 2,577,327,000 But this doesn't include other adjustments. Let me add other non-cash items from the cash flow: + Net impairment losses (already in EBITDA? No, impairments are typically below EBITDA or part of EBIT) Actually, looking at the given EBITDA: 3,160,679,000. This is given directly. Is EBITDA before or after impairments? Typically EBITDA excludes impairments (they're below EBITDA). But the given EBITDA might include or exclude them. From the income statement build-up: Revenue: 10,346,088,000 - Expenses for electricity, etc.: 6,802,383,000 - Fuel expenses: 522,109,000 - Employee benefits: 428,446,000 - Other expense: 403,487,000 - Valuation of energy derivatives: -857,961,000 (negative = gain) + Other income: 113,055,000 Let me try: 10,346,088 - 6,802,383 - 522,109 - 428,446 - 403,487 + 857,961 + 113,055 = 3,160,679. Yes! ✓ So EBITDA = 3,160,679,000 is correct and includes the energy derivatives valuation as a negative expense (i.e., gain). Now for S&P FFO, I need to go from EBITDA to FFO: FFO = EBITDA - Interest Expense + Interest Income - Tax Expense + Other non-cash adjustments? No. Standard: FFO = Net Income + D&A + Interest Expense - Interest Income + Other non-cash items - Gain on sale + Loss on sale Or: FFO = EBITDA - Tax Expense - Interest Expense + Interest Income + Other items? No, that's wrong. Let me use: FFO = Net Income + D&A + Interest Expense - Interest Income + Other non-cash items Net Income: 1,948,767,000 + D&A: 462,694,000 + Interest Expense: 101,703,000 - Interest Income: 40,132,000 + Other non-cash items (net impairments, undistributed profits, gains/losses, provisions, etc.): From cash flow adjustments not already included: - Net impairment losses on investments: -11,833,000 (already in net income, so this is an adjustment) - Undistributed profits of associates: -17,259,000 (negative means add back? This is an adjustment to reconcile net income to cash flow) - Gains/losses on disposal: 4,914,000 - Change in provisions and deferred tax: 35,247,000 - Change in contributions: 2,782,000 - Other non-cash: 31,340,000 Wait, I need to be more careful. The cash flow subtotal already includes all these adjustments. Let me verify: Net Income: 1,948,767,000 + D&A (from cash flow, net of reversals): 534,483,000 + Impairment losses on investments net: -11,833,000 + Undistributed profits adjustment: -17,259,000 + Losses/gains on disposal: 4,914,000 + Change in provisions and deferred tax: 35,247,000 + Change in contributions: 2,782,000 + Other non-cash: 31,340,000 = 1,948,767,000 + 534,483,000 - 11,833,000 - 17,259,000 + 4,914,000 + 35,247,000 + 2,782,000 + 31,340,000 = 1,948,767,000 + 579,674,000 = 2,528,441,000 But subtotal is 2,516,130,000. Difference is 12,311,000. Hmm, maybe I missed something or there's rounding, or other items. Actually, I think the subtotal might include other items not listed, or my calculation is slightly off. Let me just use the given subtotal of 2,516,130,000. For S&P FFO from subtotal: FFO = Subtotal + Interest Paid - Interest Received + Tax Paid - Dividends Received (if we want pre-interest, pre-tax FFO) Or more commonly for S&P: FFO = Subtotal + Interest Expense (accrual) - Interest Income (accrual) + Tax Expense - Tax Paid... this gets complicated. Let me use a simpler, well-established approach: FFO = Net Income + D&A + Interest Expense - Interest Income + Tax Expense This gives pre-tax, pre-interest FFO (essentially EBITDA - Tax Expense + other non-cash, but using actual tax expense): Net Income: 1,948,767,000 + D&A: 462,694,000 + Interest Expense: 101,703,000 - Interest Income: 40,132,000 + Tax Expense: 583,352,000 = 3,056,384,000 But this misses other non-cash items. Let me add them using the cash flow adjustments: + Net impairment losses (PPE and intangibles net of reversals from cash flow): 534,483,000 - 462,694,000 = 71,789,000? No wait, the 534,483,000 is D&A net of reversals, while 462,694,000 is gross D&A. Actually, looking at cash flow: "Depreciation And Amoritisation Of Property Plant And Equipment And Intangible Assets Net Of Reversals Of Impairment Losses" = 534,483,000 And income statement: "Depreciation And Amortisation Expense" = 462,694,000 "Impairment Loss" = 197,761,000 "Reversal Of Impairment Loss" = 125,973,000 So net impairment = 71,788,000 D&A net of reversals = 462,694,000 - ? No, 534,483,000 is the cash flow figure. 534,483,000 - 462,694,000 = 71,789,000 which approximately equals 197,761,000 - 125,973,000 = 71,788,000. ✓ So the cash flow D&A of 534,483,000 = 462,694,000 + 71,788,000 (net impairments). For S&P FFO, let me use: FFO = EBITDA - Cash Taxes + Other non-cash adjustments (excluding working capital) Or: FFO = Cash Flow From Operations before working capital changes + Interest Paid - Interest Received + Tax Paid - Dividends Received From cash flow: Subtotal (before working capital): 2,516,130,000 + Interest Paid: 36,100,000 - Interest Received: 6,100,000 + Tax Paid: 343,100,000 - Dividends Received: 29,900,000 (these are equity returns, not operations) = 2,516,130,000 + 36,100,000 - 6,100,000 + 343,100,000 - 29,900,000 = 2,859,330,000 But this seems high. Let me reconsider if dividends received should be excluded. Actually, for S&P FFO, dividends received from equity method investments are typically included in FFO if they're part of operating activities. But S&P might exclude them. Let me try another approach. S&P's standard FFO formula: FFO = Net Income + D&A + Deferred Income Taxes + Other Non-Cash Items Where Other Non-Cash Items includes: impairment losses, gains/losses on asset sales, provisions, equity method adjustments, etc. From our data: Net Income: 1,948,767,000 + D&A (use cash flow version which includes net impairments): 534,483,000 + Other items from cash flow: - Impairment losses on investments net: -11,833,000 - Undistributed profits: -17,259,000 - Losses/gains on disposal: 4,914,000 - Change in provisions and deferred tax: 35,247,000 - Change in contributions: 2,782,000 - Other non-cash: 31,340,000 Wait, I'm double counting. The 534,483,000 already includes D&A and net impairments on PPE. Let me use just the subtotal which is comprehensive: 2,516,130,000 This subtotal is: Net Income + all non-cash adjustments (D&A, impairments, gains/losses, provisions, equity method, etc.) For S&P FFO, I need to add back interest and tax to make it pre-financing, pre-tax: FFO = Subtotal + Interest Expense (accrual) - Interest Income (accrual) + Tax Expense = 2,516,130,000 + 101,703,000 - 40,132,000 + 583,352,000 = 3,161,053,000 Hmm, this is very close to EBITDA (3,160,679,000). Difference is only 374,000. This makes sense because: EBITDA - Tax Expense + Interest Expense - Interest Income + other non-cash ≈ FFO, but my calculation gives EBITDA + Tax, not minus. Wait: Subtotal + Interest - Interest Income + Tax = 2,516,130 + 101,703 - 40,132 + 583,352 = 3,161,053 But EBITDA = 3,160,679. These are very close, suggesting the subtotal approach is consistent. Actually, let me verify: EBITDA - Tax Expense = 3,160,679 - 583,352 = 2,577,327. This should be roughly EBT + D&A + other = 2,532,119 + 462,694 + ... = 2,994,813... no. Let me just accept that FFO ≈ 3,160,679,000 (EBITDA) - Cash Taxes + adjustments, or use the calculated 3,161,053,000. Actually, I realize I made an error. FFO should be AFTER tax, not before tax. S&P FFO is typically after-tax. Let me recalculate: FFO = Net Income + D&A + Other non-cash items + Interest Expense - Interest Income = 1,948,767,000 + 534,483,000 + (-11,833,000 - 17,259,000 + 4,914,000 + 35,247,000 + 2,782,000 + 31,340,000) + 101,703,000 - 40,132,000 = 1,948,767,000 + 534,483,000 + 45,191,000 + 101,703,000 - 40,132,000 = 2,590,012,000 Or using subtotal: 2,516,130,000 + 101,703,000 - 40,132,000 = 2,577,701,000 These are close. The difference is due to whether we use cash flow or income statement figures. For S&P FFO, I'll use: 2,577,701,000 (from subtotal + interest adjustments) Or more precisely, let me use EBITDA - Cash Taxes approach: FFO = EBITDA - Cash Taxes = 3,160,679,000 - 343,100,000 = 2,817,579,000? No, this ignores interest. Actually, the standard S&P approach for FFO/Debt is: FFO = Funds from operations = Net income + D&A + Deferred taxes + Other non-cash items This is AFTER interest and AFTER tax. So from subtotal: 2,516,130,000 is already Net Income + non-cash items. This is essentially FFO before working capital changes! But wait, subtotal includes changes in provisions and deferred taxes, which are not purely non-cash. Let me check: "Change In Noncurrent Provisions And Deferred Tax Liabilities": 35,247,000. This is a change, not a non-cash expense. For pure FFO, I should use: FFO = Net Income + D&A + Interest Expense - Interest Income + Tax Expense + Other non-cash items - Working capital changes? No, FFO excludes working capital. Actually, let me use the most standard S&P formula which is well-established: FFO = Net Income + Depreciation & Amortization + Deferred Income Taxes + Other Non-Cash Items Where "Other Non-Cash Items" includes: asset impairment, gain/loss on asset sales, stock-based compensation, etc. From our data: Net Income: 1,948,767,000 + D&A (income statement): 462,694,000 + Deferred Tax change: ? (from balance sheet: Deferred Tax Liabilities increased by 313,601,000, Deferred Tax Assets increased by 28,000. Net increase in deferred tax liabilities = 313,601,000 - 28,000 = 313,573,000. But this is a liability increase, which is a deferred tax expense/addition) Actually, from cash flow: "Change In Noncurrent Provisions And Deferred Tax Liabilities" = 35,247,000. This is the cash flow impact, not the P&L impact. From income statement: Tax Expense is 583,352,000. Cash Tax Paid is 343,100,000. So deferred tax portion = 583,352,000 - 343,100,000 = 240,252,000. + Other Non-Cash Items: - Net impairment losses (PPE): 71,788,000 (197,761 - 125,973) - Net impairment losses (investments): -11,833,000 (reversal) - Undistributed profits of associates: -17,259,000 (this is a negative adjustment, meaning we subtract it? Actually in cash flow it's subtracted from net income, meaning it was added to net income but not cash) Wait, undistributed profits of associates: This is the share of profit that was included in net income but not received as cash. So it's a positive non-cash item that needs to be subtracted to get to cash flow. For FFO, we keep it (since FFO is based on earnings). Actually, for S&P FFO, we want to ADD back items that reduced earnings but were non-cash, and SUBTRACT items that increased earnings but were non-cash. - Undistributed profits: These increased earnings but weren't cash. So for FFO, we SUBTRACT them (they're not real cash flow). - Gains on disposal: These increased earnings but weren't operating cash flow. SUBTRACT. - Impairment losses: These reduced earnings but were non-cash. ADD back. Let me recalculate FFO properly: Net Income: 1,948,767,000 + D&A: 462,694,000 (non-cash expense, add back) + Net impairment losses on PPE: 71,788,000 (non-cash, add back) + Net impairment losses on investments: -11,833,000 (this is a net reversal, meaning earnings were increased by reversal; so subtract for FFO? Or it's negative impairment = gain, so subtract) - Undistributed profits of associates: -17,259,000 (negative adjustment means... in cash flow this is subtracted from net income, meaning it was income not received. For FFO, we subtract it from net income? No, FFO keeps the accrual basis mostly) I'm overcomplicating this. Let me use the standard S&P approach as defined in their methodology: FFO = Net income from continuing operations + Depreciation & amortization + Deferred income taxes + Other non-cash items Where "Other non-cash items" typically includes: impairment charges, provisions, gain/loss on sales, equity method adjustments, etc. Using the cash flow subtotal is actually the cleanest approach because it already includes all these adjustments: Subtotal = 2,516,130,000 = Net Income + D&A + Impairments + Other non-cash items This is essentially S&P FFO, but we need to check if interest and tax are treated correctly. Actually, looking at S&P's specific methodology for utilities, they define FFO as: FFO = Net income + D&A + Deferred taxes + Other non-cash items This EXCLUDES interest. So FFO is after interest. For FFO/Net Debt ratio, S&P uses this after-interest FFO and compares to net debt. So FFO = 2,516,130,000 (approximately, from subtotal) But let me verify this is correct by checking if subtotal includes interest and tax properly. The subtotal is before working capital changes and before interest/tax cash flows. But it starts from net income which is after interest and after tax. So yes, subtotal = Net Income (after interest, after tax) + non-cash adjustments = FFO by S&P definition. Let me verify with another approach: Net Income: 1,948,767,000 + D&A: 462,694,000 + Net impairment: 71,788,000 + Other non-cash from cash flow (excluding working capital and interest/tax items): - Impairment losses on investments net: -11,833,000 - Undistributed profits: -17,259,000 (this is subtracted in cash flow, meaning it reduced cash vs earnings; for FFO we need to... actually this is an equity method adjustment) Hmm, undistributed profits: In cash flow statement, this is "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" = -17,259,000. This means cash flow is lower than net income by this amount (earnings not received as dividends). For FFO, since we want funds from operations, do we include or exclude this? S&P typically excludes equity method earnings from FFO if they're not received as dividends. Actually, no - S&P FFO includes the accrual basis earnings. Let me check: The subtotal includes -17,259,000 for undistributed profits. This means subtotal = Net Income + adjustments, and one adjustment is subtracting 17,259,000. So subtotal is less than Net Income + D&A + impairments. This makes sense: Net Income includes equity method earnings of 4,293,000. But cash flow subtracts 17,259,000 of undistributed profits. This seems inconsistent unless there are other equity method adjustments. Actually, looking at the income statement: "Share Of Profit Loss Of Associates And Joint Ventures" = 4,293,000 (positive = profit) And cash flow adjustment: "Adjustments For Undistributed Profits" = -17,259,000. This is negative, meaning it reduces cash flow vs net income. This suggests that while 4,293,000 was recognized as profit, 17,259,000 more was not distributed (or there's a timing difference). For FFO, S&P typically uses the accrual basis, so we might not need this adjustment. But the cash flow subtotal includes it. Let me just use the subtotal as the best estimate of FFO: 2,516,130,000 EUR. Actually, I want to be more precise. Let me look at what S&P specifically includes in FFO for European utilities. According to S&P Global Ratings methodology for regulated utilities: FFO = Net income + Depreciation & amortization + Deferred income taxes + Other non-cash items Where "Other non-cash items" includes changes in provisions, impairment losses, gains/losses on asset sales, etc. For the most accurate calculation, let me use: FFO = EBITDA - Cash Interest Paid - Cash Taxes Paid + Other non-cash adjustments? No. Let me try yet another approach: FFO = Operating Cash Flow + Interest Paid - Interest Received + Tax Paid - Working Capital Changes Operating Cash Flow: 2,019,859,000 + Interest Paid: 36,100,000 - Interest Received: 6,100,000 + Tax Paid: 343,100,000 - Working Capital Changes: - Inventories: -73,079,000 - Receivables: -192,271,000 - Payables: +339,687,000 - Derivative assets: +548,678,000 - Derivative liabilities: -1,360,527,000 - Provisions and tax liabilities: +241,241,000 Net working capital change: -496,271,000? Let me verify: -73,079 - 192,271 + 339,687 + 548,678 - 1,360,527 + 241,241 = -496,271,000 Check: 2,019,859 - (-496,271) = 2,516,130. Yes, matches subtotal. ✓ So FFO before working capital = 2,516,130,000. This is what I want. Now, for S&P FFO, do I add back interest paid? - If FFO is after interest: keep as is = 2,516,130,000 - If FFO is before interest: add back interest paid, subtract interest received = 2,516,130,000 + 36,100,000 - 6,100,000 = 2,546,130,000 S&P's FFO is typically AFTER interest (funds from operations available to all providers of capital, but interest is already paid). Actually, no - "Funds From Operations" in S&P terminology is typically before interest, as it's a measure of cash generation before financing. Wait, let me check: "Funds From Operations" should be the funds generated from operations, before interest and dividends. But in S&P's definition, they start from Net Income (after interest) and add back non-cash items. This gives FFO after interest. For "Funds From Operations" as used in "FFO/Debt" ratio, S&P typically means: FFO = Net Income + D&A + Deferred Taxes + Other non-cash items This is AFTER interest expense. So the interest is not added back. Let me confirm with S&P's definition: FFO interest coverage = FFO / Gross Interest Expense. If FFO is after interest, this ratio would be (Net Income + D&A + ...) / Interest, which is a coverage ratio showing how many times the FFO covers interest. This makes sense. So FFO = 2,516,130,000 EUR (I'll use this, or slightly adjusted) Actually, I want to refine this. The subtotal includes "Change In Noncurrent Provisions And Deferred Tax Liabilities" of 35,247,000. This is a change in balance sheet items, not a pure non-cash P&L item. For S&P FFO, we should use the P&L tax expense, not the balance sheet change. Let me recalculate FFO more purely: Net Income: 1,948,767,000 + D&A: 462,694,000 + Net impairment losses: 71,788,000 + Tax Expense: 583,352,000 (add back to get pre-tax) + Interest Expense: 101,703,000 (add back to get pre-interest) - Interest Income: 40,132,000 (subtract) = 3,128,172,000 Then subtract tax paid? No, for pre-tax FFO we keep tax expense. Actually, I want AFTER-tax, pre-interest FFO: = Net Income + D&A + Net impairments + Other non-cash = 1,948,767,000 + 462,694,000 + 71,788,000 + (-11,833,000 - 17,259,000 + 4,914,000 + 35,247,000 + 2,782,000 + 31,340,000) = 1,948,767,000 + 462,694,000 + 71,788,000 + 45,191,000 = 2,528,440,000 This is close to the subtotal of 2,516,130,000. Difference is 12,310,000, possibly due to rounding or additional items. I'll use FFO = 2,528,440,000 or approximately 2,516,130,000. Let me use 2,516,130,000 as it's directly from the cash flow statement and more reliable. Actually, let me reconsider whether to use subtotal or my calculation. The subtotal is 2,516,130,000 and is explicitly given in the financial statements. I'll use this as FFO. Now for Net Debt: Net Debt = Total Debt - Cash and Cash Equivalents Debt includes: - Current Financial Liabilities: 1,109,297,000 (2023-01-01) or 1,462,453,000 (2022-01-01) - Noncurrent Financial Liabilities: 2,844,559,000 (2023-01-01) or 1,834,155,000 (2022-01-01) For 2022 year-end (which is 2023-01-01 in the data, since periods end on 2023-01-01): Total Debt = Current Financial Liabilities + Noncurrent Financial Liabilities = 1,109,297,000 + 2,844,559,000 = 3,953,856,000 Cash and Cash Equivalents: 409,252,000 Net Debt = 3,953,856,000 - 409,252,000 = 3,544,604,000 Wait, I need to check if there are other debt items. "Current Derivative Financial Liabilities" and "Noncurrent Derivative Financial Liabilities" - these are typically not debt but derivatives. Also, "Trade And Other Current Payables" and "Noncurrent Payables" are trade payables, not debt. So Net Debt = 3,544,604,000 EUR. But wait - for 2022 performance, should I use 2022 beginning or end debt? The FFO is for the period 2022-01-01 to 2023-01-01. For the ratio, S&P typically uses average net debt or end-of-period net debt. Let me check: FFO/Net Debt ratio is typically calculated as FFO for the year divided by Net Debt at year-end, or average net debt. S&P typically uses year-end net debt for this ratio, or sometimes average. Let me use year-end 2022 (which is 2023-01-01 in the data). Net Debt at 2023-01-01 = 3,544,604,000 Net Debt at 2022-01-01 = (146,245,300 + 1,834,155,000) - 318,562,000 = 1,661,838,300 Average Net Debt = (3,544,604,000 + 1,661,838,300) / 2 = 2,603,221,150 FFO/Net Debt using year-end: 2,516,130,000 / 3,544,604,000 = 0.710 FFO/Net Debt using average: 2,516,130,000 / 2,603,221,150 = 0.967 S&P typically uses average debt for flow ratios, or sometimes year-end. For FFO/Net Debt, they often use year-end net debt. But wait - I need to reconsider my FFO calculation. Let me look at this more carefully. Actually, I realize I should check if S&P FFO includes or excludes working capital changes. S&P FFO explicitly EXCLUDES working capital changes. So my subtotal approach is correct. However, I want to verify: does S&P FFO include dividends received? The subtotal doesn't include dividends received (they come after). So FFO excludes dividends received. Also, does S&P FFO include interest paid? No, because we start from net income which is after interest. Let me recalculate FFO more carefully using S&P's exact methodology for utilities: From S&P Global Ratings "Methodology For Regulated Electric And Gas Utilities": "FFO includes net income from continuing operations, plus depreciation and amortization, deferred income taxes, and other non-cash items." FFO = Net income + D&A + Deferred income taxes + Other non-cash items Where "Other non-cash items" includes: - Impairment charges - Gains/losses on asset sales - Provisions and write-offs - Equity in earnings of unconsolidated affiliates (less dividends received) - Minority interest - Stock-based compensation - Etc. Let me calculate: Net Income: 1,948,767,000 + D&A: 462,694,000 + Deferred Income Taxes: ? From balance sheet: Deferred Tax Liabilities increased from 486,851,000 to 800,452,000 = +313,601,000 Deferred Tax Assets increased from 35,811,000 to 35,839,000 = +28,000 Net increase in deferred tax liabilities = 313,573,000 (this is a non-cash expense/addition) But wait, the income statement tax expense is 583,352,000 and cash tax paid is 343,100,000. The difference 240,252,000 is the deferred tax component. Actually, from cash flow: "Change In Noncurrent Provisions And Deferred Tax Liabilities" = 35,247,000. This is the cash flow statement line. For S&P FFO, deferred income taxes = Tax Expense - Cash Tax Paid = 583,352,000 - 343,100,000 = 240,252,000. Or we can use the balance sheet change. Let me use 240,252,000 as deferred tax add-back. + Other non-cash items: - Net impairment losses (PPE, net of reversal): 71,788,000 - Impairment losses on investments, net: -11,833,000 (net reversal, so negative = reduce FFO) - Undistributed profits of associates: -17,259,000 (earnings not cash, so subtract from net income for FFO? Or add back if it was included in net income?) Actually, undistributed profits: Net income includes share of profit of associates (4,293,000). But the cash flow adjustment of -17,259,000 suggests there's more to it. This might include other equity method adjustments. For S&P FFO, we typically subtract equity earnings and add dividends received. But this gets complicated. Let me use the simpler approach: FFO = subtotal = 2,516,130,000. This is the cleanest and most directly observable figure. Or, if I want to be more precise: FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash = 1,948,767,000 + 462,694,000 + 240,252,000 + 45,191,000 (other items from cash flow excluding working capital) = 2,696,904,000 Hmm, this is higher than subtotal. The difference might be due to how I'm calculating deferred taxes or other items. Actually, let me check: subtotal includes "Change In Noncurrent Provisions And Deferred Tax Liabilities" of 35,247,000, not the full deferred tax expense. So subtotal is lower because it only includes the balance sheet change, not the P&L deferred tax. For S&P FFO, we want the P&L deferred tax (tax expense - cash tax), not the balance sheet change. So my 2,696,904,000 might be more accurate. But wait, the "Change In Noncurrent Provisions And Deferred Tax Liabilities" of 35,247,000 in the cash flow might already capture the relevant amount for cash flow purposes, even if it's not the same as P&L deferred tax. Let me verify: Tax Expense 583,352,000 - Cash Tax Paid 343,100,000 = 240,252,000 deferred tax P&L. But balance sheet deferred tax liabilities increased by 313,601,000 and assets by 28,000. Net increase 313,573,000. These don't match because there are other items affecting deferred taxes (acquisitions, FX, reclassifications, etc.). For S&P FFO, I should use the P&L approach: add back deferred tax expense of 240,252,000. Let me recalculate FFO more carefully: FFO = Net Income + D&A + Deferred Tax Expense + Interest Expense - Interest Income + Other Non-Cash Items Wait, does S&P FFO include interest? Let me check. Actually, I think I'm confusing two different measures: 1. FFO (Funds From Operations) - after interest, after tax 2. CFO (Cash From Operations) or OCF - after interest, after tax, with working capital For S&P's "FFO/Net Debt" ratio, they use FFO after interest. Let me use: FFO = Net Income + D&A + Deferred Tax + Other Non-Cash = 2,696,904,000 approximately. But I need to be more careful about "Other Non-Cash Items". Let me list them: - Net impairment on PPE: 71,788,000 (add back, reduced earnings) - Net impairment/reversal on investments: -11,833,000 (subtract, increased earnings) - Undistributed profits: -17,259,000 (subtract, was in earnings but not cash? Actually this is confusing) Let me think about undistributed profits. The cash flow shows "Adjustments For Undistributed Profits Of Investments Accounted For Using Equity Method" = -17,259,000. This is negative, meaning it reduces cash flow relative to net income. This suggests that net income included more than what was received as dividends. For FFO, since we want funds from operations, and undistributed profits are not available as funds, we should subtract them from FFO (or not add them back if they were in net income). Actually, net income includes "Share Of Profit Loss Of Associates" = 4,293,000. But the adjustment is -17,259,000. This suggests there are other items too, or this is a different adjustment. For simplicity, let me use the subtotal of 2,516,130,000 as my best estimate of FFO. This is conservative and directly from the cash flow statement. Now for Net Debt. Let me recalculate carefully: At 2023-01-01 (end of 2022): - Current Financial Liabilities: 1,109,297,000 - Noncurrent Financial Liabilities: 2,844,559,000 - Total Debt: 3,953,856,000 - Cash and Cash Equivalents: 409,252,000 - Net Debt: 3,544,604,000 At 2022-01-01 (beginning of 2022): - Current Financial Liabilities: 84,056,000 - Noncurrent Financial Liabilities: 1,202,154,000 - Total Debt: 1,286,210,000 - Cash and Cash Equivalents: 49,203,000 - Net Debt: 1,237,007,000 Average Net Debt: (3,544,604,000 + 1,237,007,000) / 2 = 2,390,805,500 FFO/Net Debt (year-end): 2,516,130,000 / 3,544,604,000 = 0.710 = 71.0% FFO/Net Debt (average): 2,516,130,000 / 2,390,805,500 = 1.052 = 105.2% S&P typically reports this as a percentage or as a multiple (x). The ratio FFO/Net Debt of 0.71 means FFO covers 71% of net debt, or net debt is 1.41x FFO. Actually, looking at S&P's typical presentation, they might express this as: - FFO/Net Debt = 71% (as a percentage) - Or Net Debt/FFO = 1.41x For the ratio as typically calculated by S&P, let me check if they use percentage or multiple. S&P's "FFO to debt" ratio is typically expressed as a percentage: FFO / Debt * 100. So 71.0% or 0.71. But wait, I need to reconsider if I should use average or year-end debt. For utility ratios, S&P often uses average debt for the year for flow-to-stock ratios, but year-end is also common. Let me also consider: should I include other debt-like items? For example, are there lease liabilities included in financial liabilities? The "Payments Of Lease Liabilities" in financing activities suggests yes, leases are in debt. Also, "Current Derivative Financial Liabilities" and "Noncurrent Derivative Financial Liabilities" - these are derivatives, not debt. But if they're negative mark-to-market on hedges, they might represent economic obligations. For conservative S&P analysis, they might include some derivatives or exclude them. Standard practice is to exclude derivative liabilities from debt unless they're clearly debt-like. Let me also check if there are any other borrowings or debt-like items I missed. The financial liabilities seem comprehensive. One more item: "Cash Inflow From Money Market Transactions" and "Cash Outflow From Money Market Transactions" - these suggest money market activities. Are these included in cash? The cash figure of 409,252,000 likely includes or excludes these depending on classification. For net debt, S&P typically uses "reported net debt" which is total debt minus cash and cash equivalents. Money market transactions might be part of cash or part of financing. Given the data, I'll use: Net Debt = Current Financial Liabilities + Noncurrent Financial Liabilities - Cash and Cash Equivalents = 1,109,297,000 + 2,844,559,000 - 409,252,000 = 3,544,604,000 Now let me also consider if I should use a different FFO figure. Let me try the EBITDA-based approach: FFO = EBITDA - Cash Interest - Cash Taxes + Other non-cash adjustments? No, that's not standard. Standard S&P FFO = Net Income + D&A + Deferred Taxes + Other Non-Cash Let me calculate this more precisely: Net Income: 1,948,767,000 + D&A: 462,694,000 + Deferred Tax (P&L): 240,252,000 (583,352,000 - 343,100,000) + Other Non-Cash: - Net impairment PPE: 71,788,000 - Net impairment investments: -11,833,000 - Undistributed profits adjustment: ? - Gains/losses on disposal: 4,914,000 - Other: 31,340,000 For undistributed profits: The cash flow adjustment is -17,259,000. This means cash flow = net income - 17,259,000 + ... So undistributed profits reduced cash flow. For FFO, do we want to add back or subtract? If net income includes equity earnings that weren't received as cash, then FFO (which is about funds available) should exclude them. So subtract 17,259,000 from net income, or don't add them back. But wait, net income already includes the equity earnings. The adjustment of -17,259,000 is additional to what's in net income. Let me not double-count and just use the subtotal approach. FFO = 2,516,130,000 (subtotal) Let me verify this is reasonable by checking: EBITDA = 3,160,679,000 Less: Interest = 101,703,000 - 40,132,000 = 61,571,000 net expense Less: Tax = 583,352,000 = 3,160,679,000 - 61,571,000 - 583,352,000 = 2,515,756,000 This is very close to 2,516,130,000! The difference is 374,000, essentially rounding. This confirms that subtotal ≈ EBITDA - Net Interest - Tax Expense. So FFO = EBITDA - Interest Expense + Interest Income - Tax Expense? No wait: 3,160,679 - 101,703 + 40,132 - 583,352 = 2,515,756. Yes. But this is essentially Net Income + D&A, since: EBITDA - Interest + Interest Income - Tax = EBIT + D&A - Interest + Interest Income - Tax = EBT + D&A + Interest Income - Tax = Net Income + D&A + Interest Income... no wait. Let me check: EBIT = 2,626,196,000 (given as Profit Loss From Operating Activities, but this might not be exact EBIT) Actually: EBITDA - D&A = EBIT. Then EBIT - Interest = EBT. Then EBT - Tax = Net Income. So: EBITDA - D&A - Interest + Interest Income - Tax = Net Income? Not quite, because Interest Income is typically below EBIT. Actually: EBITDA - D&A = EBIT EBIT - Interest Expense + Interest Income? No, Interest Income is typically separate from EBIT. In any case, the calculation checks out. FFO ≈ 2,516,130,000. Now, I want to reconsider one more time whether S&P FFO should be before or after interest. Looking at S&P's published methodology more carefully: "Funds from operations (FFO): Net income from continuing operations adjusted for depreciation and amortization, deferred income taxes, and other non-cash items." This starts from Net Income, which is AFTER interest. So FFO is after interest. But then "FFO interest coverage" is defined as FFO / Gross Interest Expense. If FFO is after interest, this ratio shows how much FFO is left after interest to cover interest again? That doesn't make sense. Actually, I think S&P's FFO for interest coverage might be defined differently, or they use "FFO before interest" for some ratios. Let me check: If FFO = 2,516,130,000 and Interest Expense = 101,703,000, then FFO interest coverage = 2,516,130,000 / 101,703,000 = 24.7x. This is a reasonable coverage ratio. If FFO were before interest, it would be 2,516,130,000 + 61,571,000 = 2,577,701,000, and coverage would be 25.3x. Similar. For FFO/Net Debt, the ratio is typically calculated as FFO (after interest) / Net Debt. This shows what percentage of net debt is covered by FFO. So my calculation of 71.0% seems reasonable. But let me also consider if S&P might use "FFO before interest" for this ratio. In that case: FFO before interest = 2,577,701,000 FFO/Net Debt = 2,577,701,000 / 3,544,604,000 = 72.7% The difference is small. I'll use 71% or 0.71 as my estimate. Actually, I want to double-check my net debt calculation. Are there any other debt items? Looking at the balance sheet: - Noncurrent Financial Liabilities: 2,844,559,000 - Current Financial Liabilities: 1,109,297,000 Are there any other liabilities that are debt-like? - Noncurrent Derivative Financial Liabilities: 1,069,177,000 - these are derivatives, not typically included in debt - Current Derivative Financial Liabilities: 1,491,588,000 - same - Trade And Other Payables: 1,035,805,000 - trade payables, not debt - Noncurrent Payables: 563,379,000 - might include some debt-like items, but typically not financial debt For S&P net debt, they typically include: - Short-term borrowings - Current portion of long-term debt - Long-term debt - Less: Cash and cash equivalents - Less: Short-term investments They might also include preferred stock or hybrid instruments if they're debt-like. From our data, "Current Financial Liabilities" and "Noncurrent Financial Liabilities" seem to capture all debt. Net Debt = 3,544,604,000 Let me also verify by checking if there are lease liabilities included. The "Rightofuse Assets" suggests there are leases. The lease liabilities might be in financial liabilities or separately disclosed. Given "Payments Of Lease Liabilities" in financing activities, they're likely included in financial liabilities. One more check: Should I include "Current Derivative Financial Liabilities" as debt? For S&P, typically not, unless they're clearly debt-like (e.g., embedded derivatives in debt). Standard practice is to exclude them. Final calculation: FFO = 2,516,130,000 EUR Net Debt = 3,544,604,000 EUR FFO / Net Debt = 2,516,130,000 / 3,544,604,000 = 0.7098... ≈ 0.71 or 71% As a ratio (not percentage): 0.71 Or if expressed as percentage: 71% Or if expressed as multiple (Net Debt / FFO): 1.41x For S&P's FFO/Net Debt ratio, they typically express it as a percentage. So 71%. But let me check if they might use average net debt. With average net debt of 2,390,805,500: FFO / Average Net Debt = 2,516,130,000 / 2,390,805,500 = 1.052 = 105% This is quite different. S&P typically uses year-end debt for point-in-time ratios, or average for flow ratios. For FFO/Net Debt, I believe they use year-end net debt as the denominator. Actually, let me reconsider one more time. Looking at S&P's actual rating reports for utilities, they often calculate "FFO/Debt" where Debt is total debt (not net debt), and they might use average debt. S&P's key credit ratios for utilities: 1. FFO/Debt - FFO divided by total debt (gross debt) 2. Debt/EBITDA - total debt divided by EBITDA 3. EBITDA interest coverage - EBITDA divided by gross interest For "FFO/Net Debt", this might be a variation. Let me check if S&P uses net debt or gross debt. Actually, S&P's standard published ratio is "FFO to debt" using gross debt, not net debt. But some analysts use net debt. If using gross debt: FFO / Gross Debt = 2,516,130,000 / 3,953,856,000 = 63.6% If the question asks for FFO/Net Debt ratio specifically, then I should use net debt. Let me also consider: should I adjust FFO further? For example, S&P sometimes excludes certain non-recurring items or adjusts for regulatory lag, etc. But with the given data, I can't do such adjustments. My final answer: FFO/Net Debt = 0.71 or 71%. But wait - I want to double-check one thing. The question says "estimate the FFO / Net debt ratio for 2022". The year 2022 in the data is represented by the period 2022-01-01 to 2023-01-01. And the balance sheet at 2023-01-01 represents the end of 2022. So my calculation is correct: FFO for 2022 = 2,516,130,000; Net Debt at end of 2022 = 3,544,604,000. Ratio = 0.7098 ≈ 0.71 Let me also try with the slightly higher FFO figure if I use before-interest: FFO before interest = 2,516,130,000 + 36,100,000 - 6,100,000 = 2,546,130,000? No wait, that's adding cash interest paid and subtracting cash interest received. Actually, accrual interest expense is 101,703,000 and interest income is 40,132,000. Cash interest paid is 36,100,000 and cash interest received is 6,100,000. For FFO before interest (accrual basis): = 2,516,130,000 + 101,703,000 - 40,132,000 = 2,577,701,000 Or for FFO before interest (cash basis): = 2,516,130,000 + 36,100,000 - 6,100,000 = 2,546,130,000 I'll stick with the after-interest FFO of 2,516,130,000 as this is the standard S&P definition. Final ratio: 2,516,130,000 / 3,544,604,000 = 0.7098 Rounded: 0.71 or 71% Let me present this as 0.71 (as a decimal ratio) or 71 (as a percentage). S&P typically presents FFO/Debt as a percentage in their reports. So 71% or 71. But the question asks for "FFO / Net debt ratio", which could be expressed as a decimal or percentage. I'll provide 0.71 as the decimal ratio, or 71 if percentage. Actually, looking at typical financial ratio presentation, FFO/Net Debt is often expressed as a percentage. So 71% or simply 71. But to be safe, let me provide it as a decimal: 0.71. Wait, I want to check one more thing. Should I include the "Current Tax Liabilities" or other items in net debt? No, tax liabilities are not debt. Also, should I check if there's any restricted cash? The data doesn't indicate any, so I'll assume all cash is unrestricted. Let me also verify my net debt calculation once more: At 2023-01-01: - Current Financial Liabilities: 1,109,297,000 - Noncurrent Financial Liabilities: 2,844,559,000 Total Debt: 3,953,856,000 Less: Cash and Cash Equivalents: 409,252,000 Net Debt: 3,544,604,000 Yes, correct. One final check: Are there any "investments" that should be deducted along with cash? S&P sometimes deducts liquid investments from debt. The "Investments And Other Receivables" of 945,454,000 might include some liquid investments, but without more detail, I'll assume only cash is deducted. Also, "Current Derivative Financial Assets" of 1,833,683,000 and "Noncurrent Derivative Financial Assets" of 437,341,000 - these are derivatives, not typically netted against debt. So my final answer is: FFO / Net Debt = 2,516,130,000 / 3,544,604,000 = 0.71 (or 71%) I'll express this as 0.71 as a decimal ratio, or if S&P typically uses percentage, then 71. Actually, rethinking: in credit analysis, "FFO to debt" ratios are typically expressed as percentages. For example, S&P might say "FFO to debt of 15%" meaning FFO covers 15% of debt. So 71% would be quite high. Let me verify if my FFO is too high or net debt is too low. For a utility with EBITDA of 3.16 billion and net debt of 3.54 billion, an FFO of 2.52 billion seems reasonable (EBITDA less interest less tax, plus some addbacks). The FFO/Net Debt of 71% suggests strong cash generation relative to debt, which seems plausible for a regulated utility in 2022 with high power prices. I'll go with 0.71 as the ratio. 0.71