Leverage and net borrowings

Leverage is a measure used by management to assess the Company’s level of indebtedness. It is calculated as a ratio of net borrowings – which is calculated by excluding cash and cash equivalents and certain very liquid assets from financial debt to shareholders’ equity, including minority interest. Management periodically reviews leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out a benchmarking analysis with industry standards.

(€ million)

December 31, 2012

December 31, 2013

Change

Total debt:

24,463

25,879

1,416

- Short-term debt

5,184

4,891

(293)

- Long-term debt

19,279

20,988

1,709

Cash and cash equivalents

(7,765)

(5,288)

2,477

Securities held for trading and other securities held for non-operating purposes

(34)

(5,037)

(5,003)

Financing receivables for non-operating purposes

(1,153)

(126)

1,027

Net borrowings

15,511

15,428

(83)

Shareholders’ equity including non-controlling interest

62,558

61,174

(1,384)

Leverage

0.25

0.25

 

Net borrowings as of December 31, 2013, amounted to €15,428 million, substantially in line with 2012 (down €83 million).

Total debt amounted to €25,879 million, of which €4,891 million were short-term (including the portion of long-term debt due within 12 months equal to €2,149 million) and €20,988 million were long-term.

The ratio of net borrowings to shareholders’ equity including non-controlling interest – leverage – was 0.25 at December 31, 2013, in line with December 31, 2012.