**Step 1: Identify the relevant industry** TenneT Holding B.V. is described in the facts as a "transmission system operator" and its principal activity is "Energy Transmission Charges". It is owned by the Dutch State. This fits squarely into the **Regulated Utilities** sector, specifically under the subsector of Electricity National industry and utilities (Transmission). The methodology provided for Regulated Utilities will be applied. **Step 2: Estimate Adjusted_EBITDA** For regulated utilities, S&P typically looks at EBITDA. We need to reconstruct EBITDA from the provided income statement data. * **Revenue**: 8,299,000,000 EUR * **Operating Expense**: 9,395,000,000 EUR * **Profit/Loss from Operating Activities**: -976,000,000 EUR Let's verify the operating profit calculation: Operating Profit = Revenue - Operating Expenses + Other Gains/Losses + Share of Profit of Associates/JV? The line item "Profit Loss From Operating Activities" is -976,000,000 EUR. Usually, EBITDA is calculated as Operating Profit + Depreciation & Amortization. * **Depreciation And Amortisation Expense**: 1,233,000,000 EUR Reported EBITDA = Profit from Operating Activities + Depreciation & Amortization Reported EBITDA = -976,000,000 + 1,233,000,000 = 257,000,000 EUR. However, we must check if "Profit Loss From Operating Activities" includes the share of associates/joint ventures. The line "Share Of Profit Loss Of Associates And Joint Ventures Accounted For Using Equity Method" is 120,000,000 EUR. Often, operating profit is before equity income. Let's look at the structure. Revenue (8,299) - Operating Expense (9,395) = -1,096. Add "Other Gains Losses" (-38): -1,134. Add "Share of Profit..." (120): -1,014. The reported "Profit Loss From Operating Activities" is -976. The difference might be due to other minor items or specific classification. We will use the reported "Profit Loss From Operating Activities" as the starting point for Operating Income (EBIT). So, **EBIT** = -976,000,000 EUR. **EBITDA** = EBIT + Depreciation & Amortization EBITDA = -976,000,000 + 1,233,000,000 = **257,000,000 EUR**. **Adjustments for Regulated Utilities:** * **Leases**: S&P often adds back lease expenses to EBITDA if they are treated as operating leases in older standards, but under IFRS 16, depreciation and interest are separated. The "Depreciation And Amortisation Expense" likely includes depreciation on Right-of-Use (ROU) assets. The interest on leases is in Finance Costs. To get to a debt-neutral EBITDA comparable to pre-IFRS 16 or to align with S&P's treatment where lease principal repayments are debt-like, we usually start with reported EBITDA. S&P methodology for utilities often treats lease liabilities as debt. Therefore, we do not add back lease *expense* to EBITDA in the same way as an operating lease adjustment if it's already embedded in D&A and Interest. However, standard S&P FFO calculation starts with Adjusted EBITDA. * **Joint Ventures**: The share of profit from JVs (120M) is included in Operating Profit. S&P typically prefers proportional consolidation or equity pick-up depending on the sector. For utilities, if the JV is core, it might be proportionally consolidated. However, without explicit instruction to deconsolidate or proportionally consolidate, and given the "Equity Method" accounting, the 120M is non-cash equity income. S&P FFO usually *deducts* equity income from JVs because it's not cash flow, unless dividends are received. * Dividends Received from JVs/Associates: The cash flow statement shows "Dividends Received Classified As Operating Activities" of 92,000,000 EUR. * The equity income is 120,000,000 EUR. * Standard FFO adjustment: Deduct equity income (120M) and add back dividends received (92M). Or, simply use Cash Flow from Operations as a base. Let's stick to the EBITDA bridge. * Adjustment: Remove the non-cash equity pickup of 120M. Add back cash dividends of 92M? No, FFO is an earnings-based metric adjusted for cash items. * Let's look at the standard S&P FFO definition: FFO = Net Income + Depreciation + Deferred Taxes - Gains on Sales + Losses on Sales. * Alternatively: FFO = Adjusted EBITDA - Cash Interest - Cash Taxes. * Let's refine Adjusted EBITDA. * Reported EBITDA = 257M. * Does this include the 120M equity income? Yes, "Profit Loss From Operating Activities" usually includes share of results of associates/JV in many European formats, or it's listed separately. In the provided list, "Share Of Profit..." is a separate line item *after* Operating Expense but *before* Finance Costs? No, it's listed separately. Let's check the summation. * Revenue (8299) - OpEx (9395) = -1096. * Other Gains/Losses (-38). Sum = -1134. * If Share of JV (120) is included in Operating Profit, then Operating Profit would be -1014. But reported is -976. Difference is 38. Maybe "Other Gains" is excluded from OpEx? * Let's assume the standard IFRS format where "Profit from Operating Activities" is EBIT. * If the 120M equity income is part of the -976M, we should remove it because it's non-cash and not part of core operating cash generation for FFO purposes (unless we add back dividends). * S&P often adjusts EBITDA to exclude equity income from JVs and replace it with dividends received if they are considered recurring. * Adjusted EBITDA = Reported EBITDA - Equity Income from JV + Dividends Received from JV. * Adjusted EBITDA = 257M - 120M + 92M = **229,000,000 EUR**. *Wait*, let's look at "Other Adjustments For Noncash Items" in the cash flow section: 1,347,000,000 EUR. This is a huge number. Cash Flow from Operations (CFO) = 1,196,000,000 EUR. CFO = Net Income (-879M) + Depreciation (1,233M) + Other Non-cash (1,347M) + Working Capital Changes. This suggests there are significant non-cash adjustments. Let's try calculating FFO directly from the definition: **FFO = Adjusted EBITDA - Cash Interest - Cash Taxes**. First, let's get a robust **Adjusted EBITDA**. For a regulated utility, S&P often uses **EBITDA** as reported, adjusting for non-recurring items. Reported EBITDA = 257,000,000 EUR. Are there non-recurring items? The "Other Gains Losses" is -38M. "Other Adjustments For Noncash Items" is 1,347M. This likely includes the equity pickup reversal and other items. Let's look at the components of "Other Adjustments For Noncash Items" (1,347M). It likely includes: - Share of profit of JV/Associates (equity pickup): -120M (deduction in CFO indirect method because it's non-cash income included in Net Income). Wait, in the indirect method, you subtract equity income. - Provisions: 104M. - Depreciation is already separate. Let's reconstruct Net Income to EBITDA. Net Income = -879,000,000. Add Back: - Depreciation: 1,233,000,000. - Finance Costs (Interest): 300,000,000. - Income Tax Expense: -354,000,000 (This is a benefit, so it reduced the loss. To get to Pre-tax, we add it back? No. Net Income = Pre-tax - Tax. -879 = -1233 - (-354). Correct.) EBITDA = Net Income + Interest + Tax + Depreciation EBITDA = -879 + 300 + (-354) + 1,233 = **300,000,000 EUR**. Why the difference from the previous 257M? Previous: Op Profit (-976) + Dep (1,233) = 257. Reconciliation: Op Profit (-976) - Finance Costs (300) + Finance Income (43) = Pre-tax Profit from Ops? -976 - 257 = -1233. Pre-tax Loss = -1,233,000,000. Net Loss = -1,233 - (-354) = -879. Matches. So, **EBITDA** (Operating EBITDA) = Op Profit (-976) + Dep (1,233) = **257,000,000 EUR**. Is there any other EBITDA component? The "Share of Profit of Associates" (120M) is likely *above* the Operating Profit line or included in it? In many IFRS statements, "Profit from Operating Activities" is EBIT. If the 120M is included in the -976, then EBIT includes it. If we exclude the 120M equity income (non-cash), EBIT becomes -976 - 120 = -1,096. Then EBITDA = -1,096 + 1,233 = **137,000,000 EUR**. However, S&P often adds back dividends received from JVs to FFO or EBITDA if they are recurring. Dividends Received = 92,000,000 EUR. So, Adjusted EBITDA = 137M (Core Ops) + 92M (Cash Divs) = **229,000,000 EUR**. Let's check if there are other adjustments. "Other Gains Losses" (-38M). This is likely a loss. It's non-operating? Or operating? It's listed near operating expenses. If it's a non-recurring loss, we add it back. If it's recurring, we keep it. Given the size and nature ("Other"), it might be normalized. Let's assume it's part of normal operations for a utility unless specified as non-recurring. Let's stick with **Adjusted EBITDA = 229,000,000 EUR**. *Self-Correction/Refinement*: In the Regulated Utilities sector, S&P focuses on cash flow stability. The equity income from JVs is often volatile or non-cash. Replacing it with dividends is a standard conservative adjustment. **Step 3: Estimate FFO** Formula: **FFO = Adjusted_EBITDA - Cash_Interest - Cash_Taxes** * **Adjusted_EBITDA**: 229,000,000 EUR. * **Cash_Interest**: * Reported Finance Costs: 300,000,000 EUR. * Interest Paid (Financing Activities): 202,000,000 EUR. * Interest Received (Investing Activities): 45,000,000 EUR. * S&P typically uses **Cash Interest Paid** net of interest received if the received is operating/investing? * Standard S&P definition: Cash interest paid. * From Cash Flow Statement: "Interest Paid Classified As Financing Activities" = 202,000,000 EUR. * Note: "Interest Received Classified As Investing Activities" = 45,000,000 EUR. * Usually, FFO deducts gross cash interest paid. Sometimes net. S&P Global Ratings' "Corporate Methodology: Ratios And Adjustments" states: "Cash interest paid... net of interest capitalized and net of interest received if classified as operating cash flow." Here, interest received is investing. Interest paid is financing. * We will use **Cash Interest Paid = 202,000,000 EUR**. * **Cash_Taxes**: * Income Tax Expense: -354,000,000 EUR (Benefit). * Income Taxes Paid/Refund (Operating Activities): 231,000,000 EUR. * The cash flow statement says "Income Taxes Paid Refund Classified As Operating Activities" is **231,000,000 EUR**. * Since it is a positive number in the context of "Paid/Refund", and the tax expense was a benefit (negative expense = income), did they receive a refund? * Let's check the sign convention. "Cash Flows From Used In Operating Activities" is 1,196,000,000 (positive, inflow). * Components: * CFO excluding EEG working cap: 596M. * EEG working cap change: -1,792M? No, "Increase Decrease In Working Capital EEG Working Capital" is -1,792M. * Wait, the sum: 596 (Ops excl EEG) + (-1792) (EEG WC) = -1196? * But reported CFO is +1,196M. * Let's look at the signs. * "Cash Flows From Used In Operating Activities" 2022: 1,196,000,000. * "Cash Flows From Used In Operations Excluding EEG Working Capital" 2022: 596,000,000. * "Increase Decrease In Working Capital EEG Working Capital" 2022: -1,792,000,000. * 596 - 1792 = -1196. * There is a sign discrepancy in my interpretation or the data labels. * Let's look at 2021: * CFO: 5,705,000,000. * Ops excl EEG: -1,260,000,000. * EEG WC: -4,445,000,000. * -1260 - 4445 = -5705. * It seems the label "Cash Flows From Used In..." implies an outflow if negative, but the numbers are positive. * Actually, usually "Cash Flow FROM Operations" is an inflow. * If 2021 Ops excl EEG is -1,260M (Outflow) and EEG WC is -4,445M (Outflow?), the total would be huge outflow. But CFO is +5,705M. * This implies the "Increase Decrease" lines might be adjustments *to* net income. * Let's trust the explicit line: **"Income Taxes Paid Refund Classified As Operating Activities"**. * In 2022, this value is **231,000,000 EUR**. * Given the Tax Expense was a *benefit* of 354M, it is highly likely the company received a tax refund or had a net cash inflow from taxes. * In the FFO formula `FFO = EBITDA - Cash Interest - Cash Taxes`, "Cash Taxes" is a cash *outflow*. If it's a refund (inflow), it increases FFO. * So, Cash Tax Adjustment = **-231,000,000 EUR** (since it's an inflow, we subtract a negative, i.e., add it). * Alternatively, just treat "Cash Taxes" as the net cash paid. If they received 231M, Cash Paid = -231M. * FFO = 229M (EBITDA) - 202M (Interest) - (-231M) (Tax Refund) * FFO = 229 - 202 + 231 = **258,000,000 EUR**. Let's double check the Tax Cash Flow sign. Net Loss: -879M. Tax Benefit: 354M. Deferred Tax Asset change: 711 - 162 = +549M increase in DTA. This is a non-cash benefit (source of cash in indirect method). Current Tax Liability change: 26 - 6 = +20M increase. Cash Tax = Tax Expense - Change in Deferred - Change in Current? Cash Tax = -354 - 549 - 20 = -923? No. Let's look at the Cash Flow Statement items again. "Income Taxes Paid Refund...": 231,000,000. If this is a refund, it's a cash inflow. Let's recalculate FFO using the indirect method from CFO, which is often more reliable for S&P FFO if we adjust for working capital and other items. S&P FFO ≈ CFO + Cash Interest Paid + Cash Taxes Paid - Changes in Working Capital (non-operating?) - Capex? No, FFO is pre-working capital changes in some definitions, but S&P FFO is essentially Net Income + Depreciation - Gains + Losses. It does *not* include working capital changes. Standard S&P FFO Definition: FFO = Net Income + Depreciation & Amortization + Deferred Taxes - Gains on Asset Sales + Losses on Asset Sales. Let's use this definition, it's safer. * **Net Income**: -879,000,000 EUR. * **Depreciation & Amortization**: 1,233,000,000 EUR. * **Deferred Taxes**: * Income Tax Expense: -354,000,000. * Current Tax Expense? * Deferred Tax Expense = Total Tax - Current Tax. * We need Current Tax. * Change in Deferred Tax Assets: 711 - 162 = 549M (Increase in Asset -> Deferred Tax Benefit). * Change in Deferred Tax Liabilities: 12 - 7 = 5M (Increase in Liability -> Deferred Tax Expense). * Net Deferred Tax Benefit = 549 - 5 = 544M. * So Deferred Tax "Expense" is -544M. * In the FFO formula, we **add back Deferred Taxes**. * Add back: **-544,000,000 EUR** (i.e., subtract 544M). * **Gains/Losses on Asset Sales**: * "Adjustments For Losses Gains On Disposal Of Noncurrent Assets": 38,000,000 EUR. * The label says "Losses Gains". The value is positive 38M. * In the Cash Flow indirect method, you add back losses and subtract gains. * Since it's an "Adjustment... recognized in Profit or Loss", and it's positive 38M in the adjustment list, it was likely a **Loss** of 38M that was added back to Net Income to get CFO. * Therefore, we **add back the Loss** to Net Income for FFO. * Add: **38,000,000 EUR**. * **Equity Income**: * Net Income includes 120M equity income. This is non-cash. * S&P FFO typically **deducts** equity income from affiliates. * Deduct: **120,000,000 EUR**. * **Dividends from Affiliates**: * S&P FFO typically **adds** dividends received from unconsolidated affiliates. * Add: **92,000,000 EUR**. Calculation: FFO = -879 (NI) + 1,233 (D&A) - 544 (Def Tax) + 38 (Loss) - 120 (Equity Inc) + 92 (Divs) FFO = -879 + 1,233 - 544 + 38 - 120 + 92 FFO = 354 - 544 + 38 - 120 + 92 FFO = -190 + 38 - 120 + 92 FFO = -152 - 120 + 92 FFO = -272 + 92 **FFO = -180,000,000 EUR**. Let's cross-check with the EBITDA method. Adjusted EBITDA = 229M. Cash Interest = 202M. Cash Taxes = -231M (Refund). FFO = 229 - 202 - (-231) = 229 - 202 + 231 = 258M. Why the large difference (-180 vs 258)? Difference = 438M. Let's look at the Deferred Tax again. In the EBITDA method, we don't explicitly adjust for Deferred Tax, but Cash Taxes captures the cash impact. In the NI method, we add back Deferred Tax. Let's check the Cash Tax vs Deferred Tax reconciliation. Tax Expense = -354M. Deferred Tax Benefit = 544M. Current Tax Expense = Total - Deferred = -354 - 544 = -898M. So Current Tax Benefit is 898M. Change in Current Tax Payable: Current Tax Liabilities: 26M (2023) - 6M (2022) = +20M. Current Tax Assets: 158M (2023) - 143M (2022) = +15M. Net Current Tax Asset Increase = 15 - 20 = -5M? No. Asset Increase 15M (Use of cash / Benefit not received). Liability Increase 20M (Source of cash / Expense not paid). Cash Tax Paid = Current Tax Expense - Increase in Liability + Increase in Asset Cash Tax Paid = -898 - 20 + 15 = -903M? This implies a cash inflow (refund) of 903M. But the Cash Flow statement says 231M. There might be other tax items or the "Income Taxes Paid" line includes something else. Or my Deferred Tax calculation is wrong. DTA Change: 711 - 162 = 549. DTL Change: 12 - 7 = 5. Net DTA Increase 544. Let's trust the **Cash Flow Statement** values for Cash Interest and Cash Taxes as per S&P preference for cash-based metrics in the FFO formula `EBITDA - Cash Int - Cash Tax`. However, the EBITDA derivation (229M) might be flawed if "Profit from Operating Activities" (-976M) is not the right starting point or if adjustments are missing. Let's look at **CFO** = 1,196M. S&P FFO is often close to CFO + Cash Interest + Cash Taxes (if CFO is after interest/tax). CFO (1,196) includes working capital changes. FFO excludes working capital changes. Change in Working Capital (excluding EEG): Receivables: -1,026M (Increase in asset -> Use of cash). Inventories: -49M. Payables: -33M. Contract Liab: 103M. Fin Liab: 269M. Total WC Change (excl EEG) = -1026 - 49 - 33 + 103 + 269 = -736M. Wait, the line "Increase Decrease In Working Capital Excluding EEG Working Capital" is **736,000,000 EUR**. My sum was -736. The sign in the report is positive 736. If it's positive in the "Adjustments" section of CFO, it means it was a **source** of cash? Usually, an increase in WC is a use. If the adjustment is +736, then WC *decreased*? Let's check the components signs. "Adjustments For Decrease Increase In Trade... Receivables": -1,026. If Receivables increased, cash flow decreases. So -1026 is correct for an increase. "Adjustments For Increase Decrease In Trade... Payables": -33. If Payables increased, cash flow increases. So -33 implies Payables *decreased*? Regardless, the total WC adjustment is given as **736M**. And EEG WC adjustment is **-1,792M**. Total WC Adjustment = 736 - 1792 = -1,056M. CFO = Cash from Ops before WC + WC Adjustments. Cash from Ops before WC = 596M (from "Cash Flows From Used In Operations Excluding EEG Working Capital"?? No, that line is 596M). Let's assume 596M is the cash flow from operations *before* working capital changes? If so, FFO is often proxied by "Cash from Operations before Working Capital Changes" adjusted for interest/tax if they are included. The line "Cash Flows From Used In Operations Excluding EEG Working Capital" is 596M. Does this include Interest and Tax? Usually, "Cash from Operations" in IFRS can be presented using the indirect method starting from Net Income. Net Income (-879) + D&A (1233) + Other (1347) + Equity Adj? -879 + 1233 + 1347 = 1701. Then adjust for WC. Let's look at the S&P FFO definition again. FFO = Net Income + Depreciation + Deferred Tax - Gains + Losses. My calculated FFO was **-180M**. Let's re-evaluate the "Other Adjustments For Noncash Items" (1,347M). This likely contains the reversal of the Equity Income (-120) and the addition of Dividends? No, dividends are cash. It likely contains the 120M equity pickup reversal. If Net Income is -879, and we add back 1,233 D&A, we are at 354. We add back Deferred Tax (-544). We are at -190. We add back Loss on disposal (38). We are at -152. We subtract Equity Income (120). We are at -272. We add Dividends (92). We are at -180. This seems consistent. **Step 4: Estimate Adjusted_Debt** Formula: **Adjusted_Debt = Reported_Debt + Leases + Pension_Deficit + Hybrids - Eligible_Cash** * **Reported Debt**: * Long-term Borrowings: 19,006,000,000 EUR. * Short-term Borrowings: 709,000,000 EUR. * Current Bank Overdrafts: 0 EUR. * Other Current Financial Liabilities: 550,000,000 EUR. (S&P often includes interest-bearing short-term debt. "Other Current Financial Liabilities" is likely debt-like or derivatives. Given the size, we should check if it's debt. In utilities, this might be commercial paper or similar. We will include it as debt.) * Other Noncurrent Financial Liabilities: 185,000,000 EUR. * Total Reported Debt = 19,006 + 709 + 550 + 185 = **20,450,000,000 EUR**. * **Leases**: * Noncurrent Lease Liabilities: 574,000,000 EUR. * Current Lease Liabilities: 155,000,000 EUR. * Total Leases = **729,000,000 EUR**. * **Pension Deficit**: * Noncurrent Recognised Liabilities Defined Benefit Plan: 174,000,000 EUR. * This is the funded status deficit on the balance sheet. * Pension Deficit = **174,000,000 EUR**. * **Hybrid Debt Portion**: * Hybrid Capital: 2,125,000,000 EUR. * S&P typically treats 100% of hybrids as debt for leverage ratios if they are permanent and subordinated, or 50% depending on the specific instrument terms. For TenneT (SOE), these are likely treated as debt or equity? * S&P methodology: "We treat hybrid securities as 100% debt if they are mandatorily redeemable... otherwise 50% equity / 50% debt?" * Actually, for the FFO/Debt ratio, S&P includes the **debt portion** of hybrids in Adjusted Debt. * Standard adjustment: Include 100% of hybrids in Debt for leverage calculation? Or 50%? * In the "Regulated Utilities" section, it doesn't specify a different hybrid treatment than general corporate. General corporate: Hybrids are often 50% debt / 50% equity for credit metrics, BUT for the FFO/Debt ratio denominator, S&P often includes **100% of hybrid capital** as debt if it's rated as debt-like or if the company treats it as such for leverage targets. * However, looking at TenneT's capital structure, these are likely perpetual subordinated notes. S&P typically assigns 50% equity credit to investment-grade hybrids. This means 50% is treated as debt. * Let's assume **50% of Hybrids** are included in Adjusted Debt. * Hybrid Debt Portion = 0.5 * 2,125,000,000 = **1,062,500,000 EUR**. * *Alternative*: If S&P treats them as 100% debt for the denominator (conservative), it would be 2,125M. Given the "Equity" section lists them separately, and they are "Hybrid Capital", 50% is the standard S&P adjustment for IG issuers. * **Eligible Cash**: * Cash And Cash Equivalents: 6,547,000,000 EUR. * S&P deducts unrestricted cash. * Eligible Cash = **6,547,000,000 EUR**. * **Other Debt-like Items**: * Noncurrent Contract Liabilities: 531M. (Usually not debt). * Provisions: Not debt. **Adjusted Debt Calculation**: Adjusted Debt = 20,450 (Debt) + 729 (Leases) + 174 (Pension) + 1,062.5 (50% Hybrid) - 6,547 (Cash) Adjusted Debt = 22,415.5 - 6,547 = **15,868.5 Million EUR**. Let's check if "Other Current Financial Liabilities" (550M) and "Other Noncurrent Financial Liabilities" (185M) are definitely debt. If they are derivatives, they might be excluded. But without notes, "Financial Liabilities" usually implies interest-bearing or debt-like. We included them in Reported Debt. Let's refine the Hybrid treatment. If the prompt implies standard S&P, and TenneT is an SOE, the hybrids might be treated as equity for some metrics but debt for others. In the FFO/Debt ratio, the denominator is "Adjusted Debt". S&P's "Corporate Methodology" states: "Debt includes... hybrid securities... we typically assign 50% equity credit... meaning 50% is included in debt." So, Adjusted Debt = **15,868,500,000 EUR**. **Step 5: Calculate FFO / Adjusted_Debt** FFO = -180,000,000 EUR. Adjusted Debt = 15,868,500,000 EUR. Ratio = -180,000,000 / 15,868,500,000 Ratio = -0.01134... Let's double check the FFO sign. Net Loss -879M. The company is loss-making. EBITDA was positive (257M or 229M). Interest (202M) and Tax Refund (231M) roughly cancel out. So FFO should be close to EBITDA? EBITDA (229) - Interest (202) + Tax Refund (231) = 258M. Why did the NI method give -180M? NI (-879) + D&A (1233) = 354. Deferred Tax Add-back (-544) = -190. The Deferred Tax add-back is the culprit. Deferred Tax Benefit was 544M. In the NI method, we add back Deferred Tax Expense. If it's a benefit (negative expense), we subtract it. This removes the non-cash benefit from Net Income. This is correct for FFO. So why does the EBITDA method give +258M? EBITDA (229) - Cash Interest (202) - Cash Tax (-231) = 258. The difference is 438M. 258 - (-180) = 438. Let's look at the Deferred Tax vs Cash Tax. Deferred Tax Benefit: 544M. Cash Tax Refund: 231M. Current Tax Benefit: 898M (calculated earlier). The NI method effectively says: FFO = Cash from Ops before WC? CFO = 1,196M. WC Changes = -1,056M (736 - 1792). Cash from Ops before WC = 1,196 - (-1,056) = 2,252M? No, CFO = Pre-WC + WC. 1,196 = Pre-WC + (-1,056). Pre-WC = 2,252M. This Pre-WC number (2,252M) is very different from FFO. Pre-WC CFO includes Interest and Tax paid. FFO = Pre-WC CFO + Cash Interest + Cash Tax? FFO = 2,252 + 202 (Interest Paid, added back because CFO is after interest?) + (-231) (Tax Refund, subtracted because CFO includes it as inflow?) If CFO is after interest and tax: FFO = CFO + Cash Interest Paid - Cash Tax Refund - WC Changes. FFO = 1,196 + 202 - (-231) - (-1,056)? Wait, if WC change was -1,056 (use of cash), we add it back to get to FFO? FFO = 1,196 + 202 + 231 + 1,056 = 2,685M? This is getting messy due to sign conventions in the provided data. Let's stick to the most robust S&P definition: **FFO = Net Income + Depreciation + Deferred Taxes - Gains + Losses - Equity Income + Dividends from Equity Affiliates.** Values: NI: -879 Dep: 1,233 Def Tax: -544 (Benefit, so subtract) Loss: +38 Equity Inc: -120 Divs: +92 Sum: -879 + 1233 - 544 + 38 - 120 + 92 = **-180**. This result is negative. Adjusted Debt: 15,868.5 M. Ratio: -180 / 15,868.5 = **-0.0113**. -0.0113