Analyzing Duke Energys acquisition of Progress Energy

In 2012 Duke Energy, a large utility company with its headquarters in North Carolina, completed its $32 billion acquisition of Progress Energy. To get an idea of the size of this deal, in 2011 Duke Energy reported revenues of $14.5 billion. In 2012, with the additional revenue from Progress Energy, its revenues were $19.6 billion. To complete the requirements below you will need to obtain Duke Energy Holding Companys Form 10-K for 2011, the year before the acquisition, and for 2014, two years after the deal was closed. The Form 10-Ks can be accessed through the Investors link on the companys website, www.duke-energy.com, or through the EDGAR system. Be aware that the Form 10-Ks include separate financial statements for each of Duke Energys subsidiary companies, so be sure to use the statements for the consolidated company, Duke Energy Corporation.

2011 10-k consolidated balance sheet starts on page 78 http://www.annualreports.com/HostedData/AnnualReportArchive/d/NYSE_DUK_2011.pdf

2014 10-k Consolidated balance sheet start on page 66 https://www.duke-energy.com/_/media/pdfs/our-company/investors/de-annual-reports/2014/annual-report-2014.pdf?la=en

Questions

a. Compute the following ratios for 2011 and 2014. To make the computations simpler, use end-of-year amounts for total assets and total equity rather than averages. Show your calculations.

Net Margin

ROI

Return on equity

Current ratio

Debt to asset ratio

b. Based on the ratios computed in Requirement a, comment on the apparent effects of Duke Energys acquisition of Progressive Energy. Assume any significant change in these ratios was the result of the acquisition.

c. Based on this limited analysis, does it appear that the effects of the merger were good or bad for Duke Energy?