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 Company’s 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 company’s website, www.duke-energy.com, or through the EDGAR system. Be aware that the Form 10-Ks include separate for each of Duke Energy’s subsidiary companies, so be sure to use the statements for the consolidated company, Duke Energy Corporation.
Required
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………………………. Current ratio
Return on investment…….. Debt to assets ratio
Return on equity
b. Based on the ratios computed in Requirement a, comment on the apparent effects of Duke Energy’s 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?
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