• TABLE OF CONTENTS
HIDE
 Front Cover
 Abstract
 Table of Contents
 List of Tables
 Introduction
 Definitions
 Data and results
 Factors associated with level of...
 Conclusion














Group Title: 1987- Florida nursery business analysis series
Title: Business analysis of foliage plant nurseries in Dade County, Florida
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Permanent Link: http://ufdc.ufl.edu/UF00014561/00002
 Material Information
Title: Business analysis of foliage plant nurseries in Dade County, Florida
Series Title: 1987- : Florida nursery business analysis series
Alternate Title: Foliage plant nurseries in Dade County, Florida
Physical Description: v. : ; 28 cm.
Language: English
Creator: University of Florida -- Food and Resource Economics Dept
Florida Cooperative Extension Service
Publisher: Food & Resource Economics Dept., Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Publication Date: 1984
Copyright Date: 1988
Frequency: annual
regular
 Subjects
Subject: Foliage plant industry -- Economic aspects -- Periodicals -- Florida   ( lcsh )
Nurseries (Horticulture) -- Economic aspects -- Periodicals -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
 Notes
General Note: Description based on: 1984; title from cover.
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Bibliographic ID: UF00014561
Volume ID: VID00002
Source Institution: University of Florida
Holding Location: University of Florida
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Resource Identifier: ltqf - AAA7023
ltuf - AHN4358
oclc - 23593531
alephbibnum - 001610008
lccn - sn 91022506

Table of Contents
    Front Cover
        Page 1
    Abstract
        Page i
    Table of Contents
        Page ii
    List of Tables
        Page iii
    Introduction
        Page 1
        Page 2
    Definitions
        Page 3
    Data and results
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
    Factors associated with level of profit
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
    Conclusion
        Page 32
Full Text

J. Robert Strain
Alan W. Hodges
DeArmand Hull


Economic Information
Report 211


Business Analysis of Foliage Plant
Nurseries in Dade County, Florida
1984


Food & Resource Economics Department
Cooperative Extension Service
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611


December 1985

















ABSTRACT


Average sales, costs and returns information are presented for 24 wholesale
foliage plant nurseries in Dade Co., Florida for the tax year of 1984. Average
value of plant sales was $839,771. Cash costs including a return to the opera-
tor averaged $738,965. Non-cash costs and allowances including a 12 percent re-
turn on investment amounted to another $122,150. When the return to the opera-
tor and return on investment were deducted, remaining costs totaled $723,892.
After adjustments for change in plant inventory value and additions for miscel-
laneous income, net nursery income averaged $198,697, and return to capital av-
eraged 20.9 percent. Comparable information is presented also for the average
of the eight largest and nine smallest nurseries in the study.

KEY WORDS: Foliage nursery business analysis, income, costs, investment,
efficiency measures, Dade Co., Florida.












ACKNOWLEDGEMENTS

This report was made possible by the cooperating 24 foliage plant nursery
operators who made available their production and accounting records on a confi-
dential basis for analysis and averaging, and it was greatly facilitated by
funds supplied by the Florida Foliage Foundation. Acknowledgement and apprecia-
tion of the help received, however, does not alter the fact that errors in the
data or in the interpretation of the information presented herein are the sole
responsibility of the authors.








TABLE OF CONTENTS


ABSTRACT . . . . . .
ACKNOWLEDGEMENTS . . . .
LIST OF TABLES . . . .


INTRODUCTION . . . . . . .
PROCEDURE . . . . . . .
DEFINITIONS . . . . . .
DATA AND RESULTS . . . . . .
Size of Business . . . . .
Rates of Production . . .
Labor Efficiency . . . . .
The Use of Space . . . . .
Efficiency in the Use of Capital .
Dollar Costs by Expense Category*.


Percent of Total Costs by Expense Category*.. .. ...
Cost Per Square Foot of Total Bed and Bench Space* . .
Cost Per Square Foot of Propagating and Finishing Space*
Cost Per Dollar of Sales Adjusted for Inventory Change*.
Cost Per Dollar of Sales . . . . . . . .
Income Summary . . . . . . . . . . .
Total Gain . . . . . . . . . . .
Net Nursery Income . . . . . . . . .
Return on Capital . . . . . . . .
Factors Associated With Level of Profits . . . .
Size of Business . . . . . . . . .
Production Rate . . . . . . . . .
Labor Efficiency . . . . . . . . .
Space Use Efficiency . . . . . . . .
Use of Capital . . . . . . . . .


*These sections also contain the
- Salaries and.Wages
Production Supplies
Other Production Costs
Administrative and Overhead
Total Cash Costs
Non-Cash Costs
Total All Costs


following subcategories:


Page


i
iii


. . . . . .
. . . . . .


: : : : : :


: : :


: : : :


: : : : : : :


I I I I I








TABLE OF CONTENTS (Continued)


Level of Costs . . . . . . . . ... . . . . 29
Cost Efficiency. . . . . . . . . . . . 30
Growth in the Business . . . . . . . . .. .. . 30
Range of Figures . . . . . . . .. . . .. . 31
CONCLUDING COMMENTS. . . . . . . . . . . . . 31

LIST OF TABLES
Table Page
1 Size of business, 24 wholesale foliage plant nurseries in
Dade Co., Florida, 1984. . . . . . . . . . 5

2 Rates of production, 24 wholesale foliage plant nurseries in
Dade Co., Florida, 1984 ....... . . . . . 6

3 Labor efficiency, 24 wholesale foliage plant nurseries In
Dade Co., Florida, 1984. . . . . . . . . . 7

4 The use of space, 24 wholesale foliage plant nurseries in
Dade Co., Florida, 1984. . , . . . .. . 9

5 Efficiency in the use of capital,
24 wholesale foliage plant nurseries in Dade Co., Florida, 1984. . 11

6 Dollar costs by expense category,
24 wholesale foliage plant nurseries in Dade Co., Florida, 1984. . 13

7 Percent of total costs by expense category,
24 wholesale foliage plant nurseries in Dade Co., Florida, 1984. . 15

8 Costs per square foot of total bed and bench space,
24 wholesale foliage plant nurseries in Dade Co., Florida, 1984. . 17

9 Costs per square foot of propagating and finishing space,
24 wholesale foliage plant nurseries in Dade Co., Florida, 1984. . 19

10 Costs per dollar of sales adjusted for change in plant inventory,
24 wholesale foliage plant nurseries in Dade Co., Florida, 1984. . 21

11 Cost per dollar of sales (no adjustment for change in plant inventory,
24 wholesale foliage plant nurseries in Dade Co., Florida, 1984. . 23

12 Income summary, 24 wholesale foliage plant nurseries in
Dade Co., Florida, 1984. . . . , . . . . 25

13 Factors associated with level of profit, 24 wholesale
foliage plant nurseries in Dade Co., Florida, 1984 . . . . .. 27

14 Range of figures on factors associated with level of profit,
24 wholesale foliage plant nurseries In Dade Co., Florida, 1984. . 31















BUSINESS ANALYSIS OF FOLIAGE PLANT NURSERIES IN DADE COUNTY, FLORIDA, 1984


J. Robert Strain, Alan Hodges and DeArmand Hull


INTRODUCTION


This publication contains information on sales, costs, returns and produc-
tion efficiency for foliage plant nurseries in Dade Co., Florida for 1984. Oth-
er publications in this series includes reports on Central Florida foliage plant
nurseries, and container ornamental plant nurseries.
Purposes of the nursery business analysis series include:
1) Furnishing nursery operators with various physical and economic measures
that may be used in evaluating the efficiency of individual nurseries;
2) Supplying cooperating nursery operators with data so that they may make
more informed management decisions;
3) Providing individuals considering entering the wholesale plant production
business with an estimate of the input requirement and revenue potential; and
4) Providing Florida Extension personnel with data for conducting education-
al programs with nursery operators.


PROCEDURE


The information and averages presented in this report are based on data sup-
plied by 24 nursery operators in the form of confidential production and ac-
counting records. Their nurseries are all located in Dade County, Florida. The
nursery operators participated in the program voluntarily and do not represent a
statistically selected sample. In fact, the nursery operators participating in
the Florida Nursery Business Analysis Program are thought to represent some of


J. ROBERT STRAIN is an extension economist and professor, and ALAN HODGES is
a research assistant, both in IFAS, Food and Resource Economics Department,
DeARMAND HULL is a Dade county extension ornamentals agent.








2





the more efficient foliage plant nurseries in Dade Co., Florida, rather than
being typical of the foliage plant nursery industry of the area.
Data were collected for the 1984 tax year. 4n some cases, data were re-
ceived for a fiscal year that did not coincide with the 1984 calendar year. Da-
ta for fiscal years ending after July 1, 1983 and before July 1, 1985 were in-
cluded with the 1984 calendar year data.
Not all nursery operators drew a regular salary from their operation. In
these instances, an estimate of the value of the time of the operator was col-
lected and used in the analysis in order to provide a more equitable basis for
comparing data. For the same reason, interest expense paid by the individual
nursery operator was excluded from the costs listed in this report. Instead, an
interest charge for the total owned investment was calculated at the rate of 12
percent per year and included as a non-cash cost.
The owned capital investment reflects the depreciated book value of build-
ings, improvements, machinery and equipment, Growing plants also are included
as a part of the owned capital investment, but at a value lower than the regular
wholesale price. This is because, in a normal growing operation, most of the
plants in inventory are not of a salable size. Some will barely be started,
some ready to sell, and the others scattered in between. A common practice is
to value all plants, whether just started or almost finished at 50 percent of
their wholesale price if finished. However, some nursery operators use other
methods. For this report, the values received from the nursery operators were
the values used. Land included in owned capital investment was valued at the
original purchase price. While this may not represent the investment of a nur-
sery operator if he or she were to buy the land in 1984, it does represent the
investment actually involved in the operation.
The data from individual nurseries are averaged and presented in tablular
form. The tables present average values for all 24 nurseries, for the eight
"largest" nurseries, and for the nine "smallest" nurseries. The largest nur-
series had plant sales valued at $500,000 or more. The smallest nurseries had
less the $200,000.











DEFINITIONS


In general, the terms used in this report are thought to be self explana-
tory. However, experience indicates that some of the terms used here are less
familiar than others. They are defined as follows, and again later where they
are used:

Value of own plants sold: the value of total plant sales minus the cost of
plants purchased for immediate resale. The cost of plants purchased for grow-
ing-on are not deducted.

Fulltime equivalent employee: the equivalent of one person working 40 hours
a week for 52 weeks a year (2080 hours a year). The most common method for ob-
taining the number of fulltime employees for this report was to divide the total
annual payroll hours for the nursery by 2080, and then add on the number of
family and management people not paid on an hourly basis.

Capital owned: the net value (cost after adjusting for depreciation taken
in prior years) of capital assets, or investment in the nursery operation.

Capital managed: the sum of capital owned plus the value of additional cap-
ital items used and under the control of the manager. Rented land and leased
buildings, equipment, etc., would be added to capital owned to obtain the value
of capital managed in the nursery operation.

Annual turnover of capital: the percentage that results from dividing the
value of own plants sold by the value of capital (either owned or managed). It
is annual plant sales stated in terms of percent of the capital involved.

Total gain: the sum of plant sales, changes in plant and supply inven-
tories, and miscellaneous cash income. It represents the total effect of the
year's operation, be it in the form of cash received or in the form of change in
values of inventories.

Net nursery income: the net effect of the year's operation. To obtain it,
all cash costs (except operator's salary), and all non-cash costs (except in-
terest on capital) are subtracted from total gain. The result is the return for
the time and managerial skills of the operator, and for the use of the capital
invested in the operation.

Return to capital: the portion of net nursery income that is left after
subtracting the salary or time value of the operator. It is what the owned cap-
ital earned.

Rate of return on capital: return to capital divided by the value of owned
capital. It is the rate earned on the capital invested.










DATA AND RESULTS


The data in the first 11 tables present various size and efficiency mea-
sures. Data in Tables 12 through 14 relate to the profitability of nurseries.
In the first five tables, more than one measure of efficiency could be used.
The first item in each table has traditionally been presented as "The one best
measure". It is followed by other measures that also are useful for certain
purposes or are meaningful to many growers. Where information in the tables is
presented to the nearest whole number, arithmetic inconsistencies from rounding
may be noted.


Size of business (Table 1)


Size of business data in Table 1 is basic. When combined with cost data in
Table 6, it provides the nursery operator most of the data required for develop-
ing the remaining tables in this report.
For size of business, the one best measure selected was "Value of own plants
sold" (Table 1 item A). In other words, this is income from the sale of the
plants grown in the nursery. This averaged $839,771 for the 24 nurseries. For
the eight largest nurseries, it was $2,153,330, or about 2.5 times the average.
The smallest ones had $82,379, or about 10 percent of the average. Adjusting
sales for change in value of plant inventory (Table 1 item B) did not alter ma-
terially these relationships.
Total bed and bench space (Table 1C) averaged 686,137 square feet for the 24
nurseries. For the eight largest nurseries, it was 1,826,298 square feet, or
2.7 times the average. The nine smallest nurseries had 63,713 square feet, or
about half the average.
Capital owned (Table IN) averaged $687,440 for the 24 nurseries. For the
eight largest nurseries, it was $1,471,625, or 2.1 times the average. The nine
smallest nurseries had $207,326, or 30 percent of the average.
Capital managed (Table IT) averaged $941,856, or 37 percent more than the
capital owned by the nursery operators. The difference was largely due to the
value of land. For the eight largest nurseries, it was $2,165,125, or 47 per-
cent more than they owned. The smallest nurseries managed 22 percent more than
the capital owned, or $254,436. The difference also was in the value for land.







5

Table 1.--Size of business, 24 wholesale foliage plant nurseries in Dade Co.,
Florida, 1984.

Average Average Average
Item Unit all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - - - - - T-a --a -ct m- -ii-a - - - - - - - -


A Value of own plants sold(a)
- - - - - - Other
Value of own plants sold
B adjusted for change in
plant inventory value

C Total bed & bench space.

D Propagating & finishing
bed & bench space . .

E Stock plant bed &
bench space . . .

F Total nursery area . .
G Total nursery area . .

H Average fulltime
equivalent employees(b).

Capital owned(c) in:
I Growing plants . . .
J Buildings, fences, wells
K Machinery & equipment. .
L Land . . . . . .
M Supplies . . .
N Total owned capital

Capital managed(d) in:
0 Growing plants . . .
P Buildings, fences, wells
Q Machinery & equipment.
R Land . . . . . .
S Supplies . . . .
T Total managed capital .


$
useful


839,771 2,153,330
indicators of size -


$ 916,114 2,322,854


sq ft 686,137


1,826,298


sq ft 590,232 1,551,198


sq ft 95,905


275,100


sq ft 902,556 2,372,271
acres 20.7 54.5


number


19.4


340,413
154,650
55,114
126,532
10,730
687,440


340,413
198,317
61,843
330,553
10,730
941 ,856


47.7


744,341
321,173
118,403
270,643
17,065
1,471,625


744,341
440,923
134,653
828,143
17,065
2,165,125


(a) Value of own plants sold--is the value
cost of plants purchased for immediate resale.
growing-on is no deducted.


of total plant sales minus the
The cost of plant purchased for


(b) Fulltime equivalent employee--is the equivalent of one person working 40
hours a week for 52 weeks a year (2080 hours).

(c) Capital owned--is the net value (original post less depreciation taken)
of capital assets in the nursery operation.

(d) Capital managed--is the sum of capital owned plus the value of addition-
al capital items used and under the control of the manager (e.g., rented land).


82,879


118,425


63,713


56,789


6,925

124,176
2.9


4.2


86,673
80,569
19,874
17,982
2,228
207,326


86,673
88,068
19,874
57,593
2,228
254,436










Rates of Production (Table 2)


"Value of own plants sold per square foot of total bed and bench space" (Ta-
ble 1 item A divided by item C) is the traditional rate of production measure
used among nurseries. The average value for the 24 nurseries was $1.22. For
the eight largest nurseries, it was $1.18. The nine smallest nurseries had 1.30,
or 6 percent greater than the average sales per square foot of bed and bench
space. When sales were adjusted for change in inventory value (Table 1B divided
by 1C), the smallest nurseries showed nearly 40 percent higher sales per square
foot than the average.
Sales per square foot of propagating and finishing space (Table 1A divided
by 1D) is a more accurate indicator of growing efficiency. Output from stock
plant areas may reduce costs, but pay no bills unless cuttings are sold. It is
the plants grown on the propagating and finishing space that pay the bills for
the entire nursery operation. This amounted to $1.42 per square foot for the 24
nurseries. For the eight largest nurseries, it was $1.39, or two percent less
than the average. The nine smallest nurseries had $1.46 which was 4 percent
greater than the average.

Table 2.--Rates of production, 24 wholesale foliage plant nurseries in Dade Co.,
Florida, 1984.

Average Average Average
Item Unit all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - - - - -- The one best measure - - - - - - - -
Value of own plants sold per
sq ft of total bed & bench
space - - (Table 1A/1C) $ 1.22 1.18 1.30
- - - - - - - Other useful indicators - - - - - - -
Value of own plants sold per
sq ft adjusted for inventory
change - - (Table 1B/1C) $ 1.34 1.27 1.86

Value of own plants sold per
sq ft of propagating & fin-
ishing space (Table 1A/1D) $ 1.42 1.39 1.46
--- adjusted for inventory
change - - (Table 1B/1D) $ 1.55 1.50 2.09

Value of own plants sold per
acre - - (Table 1A/1G) $ 40,530 39,540 29,073
--- adjusted for inventory
change - - (Table 1B/1G) $ 44,214 42,653 41,543










Labor Efficiency (Table 3)


"Value of own plants sold per employee" (Table 1A divided by 1H) was selec-
ted as the one best measure of labor efficiency. This averaged $43,332 per em-
ployee for the 24 nurseries. For the eight largest nurseries, sales averaged
$45,181, or 4.3 percent more than the average. The small nurseries had $19,828
in sales per employee, or less than half the average value. Adjusting for change
in inventory value (Table 1B divided by 1H) increased the average by $3939 to
$47,271. For the eight largest nurseries, the increase was $3,557 per person to
$48,738. The smallest nurseries were up $8,505 per person to $28,331.
Total bed and bench space per employee (Table IC divided by 1H) averaged
35,404 square feet. For the eight largest nurseries, it was 38,319 square feet,
or roughly 8 percent more than the average. The nine smallest nurseries had
15,242 square feet per person, less than half of the average.
Propagating and finishing space per person (Table ID divided by 1H) averaged
30,456 square feet per employee. For the eight largest nurseries it was 7 per-
cent higher at 32,547 square feet. The smallest nurseries had only 45 percent
of the average at 13,586 square feet.



Table 3.--Labor efficiency, 24 wholesale foliage plant nurseries in Dade Co.,
Florida, 1984.

Average Average Average
Item Unit all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - - - - - The one best measure - - - - - - - -
Value of own plants sold per
employee - (Table 1A/1H) $ 43,332 45,181 19,828
- - - - - - - Other useful indicators - - - - - - -
Value of own plants sold per
employee adjusted for change
in inventory (Table 1B/1H) $ 47,271 48,738 28,331

Total bed & bench space per
employee - (Table IC/1H) sq ft 35,404 38,319 15,242

Propagating & finishing space
per employee (Table 1D/1H) sq ft 30,456 32,547 13,586

Total nursery area per
employee (Table 1F/1H) sq ft 46,571 49,775 29,707









The Use of Space (Table 4)


The one measure selected as best for measuring the intensity of space use
was "An'nual turnover of plant inventory value" (Table 1A divided by 11). This
indicates the number of times that funds tied up in plant inventory were repre-
sented by sales during the year.
The reliability of this number depends upon the care and accuracy with which
plant inventory records are kept. Some nursery operators in the program keep
careful inventories of plant numbers, while others tend to approximate their
figures. But the idea is deemed valid, and should be especially useful to those
who compare their figures with their own data of the previous year. In this
case, the nursery operator has first hand knowledge of the nature and the de-
pendability of the comparison.
Annual turnover of plant inventory value in the 24 nurseries averaged 247
percent. This means that annual plant sales amounted to almost two and a half
times (247 percent) the value of plants in inventory. For the eight largest
nurseries, turnover was 289 percent. Their annual plant sales were 2.89 times
the value of plants in inventory. The nine smallest nurseries had a much lower
turnover rate. It was 96 percent.
Vacant bed and bench space is a measure of efficiency of space use. Gener-
ally, reducing the percent of space vacant on the average is desirable. How-
ever, some vacancy is inevitable between the time a plant is removed for sale
and the time another is put in its place to start growing. The average amount
of vacant space during the year divided by total bed and bench space (Table 1C)
shows the average percent of vacant space. This was 5.52 percent for the 24
nurseries. For the largest ones, it was 5.68 percent. The smallest nurseries
had 6.36 percent.
Other useful indicators to study are percent of total nursery area including
buildings and roadways that is bed and bench space, and the division of bed and
bench space between propagating and finishing space and stock plant area. Other
things being equal, the higher the percentage of total nursery area devoted to
bed and bench space, and the higher the percentage of bed and bench space used
for propagating and finishing rather than stock plants, the better. However,
other things are seldom equal, such as the cost of raising rather than buying
cuttings, and availability of quality material when needed.









The 24 nurseries averaged 686,137 square feet of bed and bench space, which
was 76.02 percent of their total nursery area. The eight largest nurseries av-
eraged 76.99 percent of their total area in bed and bench space, while the nine
smallest nurseries utilized 51.31 percent of their total nursery area as bed and
bench space.
Propagating and finishing area averaged 590,232 square feet for the 24 nurs-
eries. This was 86.02 percent of the total bed and bench space (Table 1D di-
vided by 1C). For the eight largest nurseries, it was 1,551,198 square feet, or
263 percent of the average. However, this was 84.94 percent of the total bed
and bench space, indicating that the largest nurseries devoted slightly more of
their space to stock plants than the average. Then nine smallest nurseries had
56,789 square feet for propagating and finishing, which was but 9.62 percent of
the average. However, this space represented 89.13 percent of the total bed and
bench space. This is probably natural, since smallest nurseries, especially
those just getting started, may not be able to afford the luxury of maintaining
as many stock plants as they would like.



Table 4.--The use of space, 24 wholesale foliage plant nurseries in Dade Co.,
Florida, 1984.

Average Average Average
Item Unit all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - - - - Intensity of space use - - - - - - -
Annual turnover of plant in-
ventory value -(Table 1A/11) % 247 289 96
- - - - - - - Efficiency of space use - - - - - - -
Vacant bed & bench space sq ft 37,891 103,782 4,051
- - -(divided by Table 1C) % 5.52 5.68 6.36
- - - - - - - Other useful indicators - - - - - - -
Total nursery area incl bldgs
roadways (same as Table 1F) sq ft 902,556 2,372,271 124,176

Total bed & bench space sq ft 686,137 1,826,298 63,713
- - - - -(Table 1C/1F) / 76.02 76.99 51.31

Propagating & finishing bed sq ft 590,232 1,551,198 56,789
& bench space -(Table 1D/1F) 86.02 84.94 89.13

Stock plant bed & bench space sq ft 95,905 275,100 6,925
- - - - -(Table 1E/1C) % 13.98 15.06 10.87









Efficiency in Use of Capital (Table 5)


A number of possibilities exist for measuring efficiency in the use of capi-
tal. The one selected as the best single indicator was "Annual turnover of own-
ed capital value". This is the percentage that results from dividing the value
of own plants sold by the value of capital owned (Table lA divided by 1N). An-
nual turnover averaged 122.2 percent for the 24 nurseries. This means that
sales for the year equaled almost one and a quarter times the capital invested.
For the eight largest nurseries, it was 146.3, which was a 24 percent faster
turnover rate than the average. The nine smallest nurseries had 40.0, which was
less than a third of the average turnover rate.
Managed capital turnover averaged 89.2 percent for the 24 nurseries. Thus,
there was enough additional capital being managed to reduce the turnover rate
about 33 percent. For the eight largest nurseries, it was 99.5, meaning there
was enough additional capital involved in the operation to reduce the turnover
rate by 47 percent. The nine smallest nurseries had enough additional capital
to manage to reduce turnover by 7 percent to 32.6.
Capital invested per employee (Table IN divided by 1H) averaged $35,472 for
the 24 nurseries. For the eight largest nurseries, it was $30,878, or about 87
percent of the average, indicating more efficient use of owned capital. The
nine smallest nurseries had $49,600 which was 40 percent higher than the
average.
Average capital investment per acre of nursery area (Table IN divided by 1G)
was $33,178 for the 24 nurseries. For the eight largest nurseries, it was
$27,022, or 19 percent lower than the average. The nine smallest nurseries had
$72,728, or over two times the average. Calculations for managed capital showed
a similar relationship, with the largest nurseries managing about 13 percent
less than the average per acre, and the smallest nurseries having almost twice
the average.
Growing plants represented 36.1 percent of the capital managed by the 24
nurseries. For the largest nurseries, it was 34.4 percent. The smallest nurs-
eries had 34.1 percent of their capital tied up in plants.
Buildings and installations averaged 21.1 percent of the total. For the
eight largest nurseries, it was about the same at 20.4 percent. The nine small-
est nurseries had 34.6 percent of their capital in buildings. For all three









groups, machinery and equipment took between 6 and 8 percent of the capital.
The smallest nurseries used less than the average for land. Both largest and
smallest nurseries showed slightly less than the average investment in supplies.


Table 5.--Efficiency in use of capital, 24 wholesale foliage
in Dade Co., Florida, 1984.


plant nurseries


Average Average Average
Item Unit all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - - - - - The one best measure - - - - - - - -


Annual turnover(e) of owned
capital value (Table IA/1N) %
- - - - - - -- Other
Annual turnover(e) of managed
capital value (Table IA/1T) %

Per employee:
Capital owned (Table IN/1H) $
Capital managed (Table IT/IH) $

Per acre:
Capital owned- -(Table IN/1G) $
Capital managed (Table IT/IG) $

Managed capital/employee in:
Plants - - -(Table 10/1H) $
Buildings - -(Table 1P/1H) $
Mach & equip -(Table 1Q/1H) $
Land - - -(Table 1R/1H) $

Managed capital per acre in:
Plants - - -(Table 10/1G) $
Buildings - -(Table IP/1G) $
Mach & equip -(Table 1Q/IG) $
Land - - -(Table IR/1G) $

Percent of capital managed in:
Plants - - -(Table 10/IT) %
Buildings - -(Table 1P/1T) %
Mach & equip -(Table 1Q/1T) %
Land - - -(Table 1R/1T) %
Supplies - -(Table 1S/1T) %
Total nursery (Table IT/1T) %


122.2 146.3
useful indicators - -


89.2


35,472
48,599


33,178
45,457


17,565
10,233
3,191
17,056


16,429
9,571
2,985
15,953


36.1
21.1
6.6
35.1
1 .1
100.0


99.5


30,878
45,429


27,022
39,756


15,618
9,251
2,825
17,376


13,668
8,096
2,473
15,206


34.4
20.4
6.2
38.2
0.8
100.0


40.0


32.6


49,600
60,870


72,728
89,254


20,735
21,069
4,754
13,778


30,404
30,894
6,972
20,203


34.1
34.6
7.8
22.6
0.9
100.0


(e) Annual turnover of capital value--is the


percentage


that results from
of capital (Table


dividing the value of own plants sold (Table 1A) by the value
1N or IT).


-


--









Dollar Costs by Expense Category (Table 6)


Dollar costs by expense category were obtained from the annual profit and
loss statement or tax records of the participating nurseries. The cash cost
categories were grouped into wages and salaries, production supplies, other pro-
duction costs, and administrative and overhead expense. Dollar costs should be
useful for comparing the relative magnitude of the various cost items, and as a
guide to persons interested in Dade Co., Florida foliage nurseries as an invest-
ment, either as buyers, sellers or lenders.
Salaries and Wages
The salary and wage group includes operator salary or time value. Average
was $288,441. For the largest nurseries, they were $708,295, or three times the
average. The smallest nurseries had $47,239, or 20 percent of the average.
Production Supplies
Production supplies include the group starting with "plants and seeds"
through "other production supplies". -They averaged $303,437 for the 24 nurs-
eries. For the largest nurseries, they were $768,289, or 2.5 times the average.
The smallest nurseries had $30,164, or 10 percent of the average.
Other Production Costs
Other production costs include "repairs" and "equipment operating costs".
They averaged $31,324 for the 24 nurseries. For the eight largest nurseries,
they were $76,992, or 2.5 times the average. The smallest nurseries had $3,945,
or 13 percent of the average.
Administrative and Overhead
Administrative and overhead expenses usually cannot be assigned to any par-
ticular crop or growing activity, yet must be covered in order to remain in bus-
iness. They include the group starting with "travel and entertainment" through
"other cash expenses". They averaged $115,763 for the 24 nurseries. For the
largest nurseries, they were $298,899, or over two and one half times the aver-
age. The smallest nurseries had $15,256, or 13 percent of the average.
Total Cash Costs
Total cash costs averaged $738,965. Larger nurseries averaged $1,852,475,
or two and one half times the average. Smaller ones had $96,604, or 13 percent
of the average.







Non-Cash Costs
Non-cash costs include depreciation allowances, decreases in the supply in-
ventory (using supplies purchased during a previous time period), and an inter-
est charge for the use of the capital invested in the nursery. These costs av-
eraged $122,150. For the largest nurseries, they were $256,459, one and three
quarters average. The smallest ones had $47,241, or 39 percent of the average.
Total All Costs
Total costs averaged $861,115. Larger nurseries averaged $2,108,934 (2.5
times the average), and smallest ones had $143,845 (17 percent of the average).

Table 6.--Dollar costs by expense category, 24 wholesale foliage plant nurseries
in Dade Co., Florida, 1984.

Average Average Average
Item all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - -Dollars- - - - -


Cash Costs
Operator's salary . . . . .
Other wages & salaries . . .

Plants & seeds to grow on . . .
Pots & growing containers . . .
Fuel for production heat . .
Peat, soil, shavings, etc . . .
Fertilizer & lime . . . . .
Pesticides & other chemicals. . .
Packing boxes & supplies . .
Other production supplies . . .

Repairs & maintenance . . . .
Equipment operating costs . . .

Travel & entertainment . . .
Insurance . . . . . . .
Telephone . . . . . . .
Electricity . . . . . .
Taxes, licenses, bonds . . .
Advertising . . . . . .
Rent: land and/or buildings . .
Other cash expenses . . . .
Total cash costs . . . .

Non-Cash Costs
Depreciation: mach & equip . .
Depreciation: bldgs, fences, wells.
Inventory decrease in supplies. .
Interest on capital, 12% . . .
Total non-cash costs . . .


54,730
233,711

145,430
40,721
6,320
28,253
16,996
18,157
23,595
23,964

20,678
10,647

7,494
14,494
9,233
5,055
4,554
9,009
10,165
55,760
738,965

17,428
22,229
0
82,493
122,150


Total All Costs. . . . . ... 861,115


105,619
602,675

363,903
99,288
17,370
68,928
44,540
48,783
61,095
64,382

54,388
22,605


16,459
36,071
20,708
11,068
11,190
22,509
24,216
156,676
1,852,475

35,361
44,503
0
176,595
256,459

2,108,934


22,145
25,094

9,845
7,943
958
2,941
1,661
1,447
3,069
2,300

1,888
2,057


2,329
2,790
1,613
1,677
596
1,336
2,522
2,393
96,604

9,474
12,888
0
24,879
47,241

143,845


r









Percent of Total Cost by Expense Category (Table 7)


While expenditures in the form of dollars show the magnitude of expenses for
various cost categories, they are not very helpful for comparing cost relation-
ships between different sizes of nurseries. But costs as a percent of the total
are useful for this purpose. These are obtained by dividing each of the dollar
expense items in Table 6 by the corresponding "Total all costs" figure at the
bottom of the table.
Salaries and Wages
Salaries and wages (includes operator) averaged 33.50 percent of all costs
for the 24 nurseries. For the eight largest ones, they were 33.59 percent. The
smallest nurseries had 32.84 percent, or practically the same as the others.
Production Supplies
Production supplies ("plants and seeds" through "other production supplies")
averaged 35.23 percent for the 24 nurseries. For the largest nurseries, they
were 36.43 percent, or 1.20 percent more than the average. The smallest nurs-
eries averaged 20.96 percent of total costs, or 14.27 percent below the average.
Other Production Costs
Other production costs ("repairs" and "equipment operating costs") averaged
3.64 percent for the 24 nurseries. For the eight largest ones, they were 3.65
percent. The nine smallest nurseries had 2.74 percent, or .90 percent lower than
the average.
Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 13.45 percent
of all costs for the 24 nurseries. For the eight largest ones, they were 14.17
percent. The smallest nurseries had 10.60 percent, or 2.85 percent under the
average.
Total Cash Costs
Total cash costs represented 85.81 percent of all costs and allowances for
the 24 nurseries. For the largest ones, it was 87.84 percent, or 2.03 percent
more than the average. The smallest ones had 67.16 percent, almost 19 percent
less than the average.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") are the addi-
tional costs that need to be covered eventually, though not necessarily with









They averaged 14.19 percent of total costs


for the 24 nurseries. For the eight largest ones, they averaged 12.16, or 2
percent less than the average. Hence, the largest nurseries had a higher per-
cent of their total operating expense in the form of cash costs. The nine
smallest nurseries had 32.84 percent of their total as non-cash costs. This was
more than two times the average, and 2.7 times the rate of the largest nurser-
ies. The largest differences were in the percentages of total costs represented
by interest on capital.

Table 7.--Percent of total costs by expense category, 24 wholesale foliage
plant nurseries in Dade Co., Florida, 1984.

Average Average Average
Item all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- -- - -D- --


Cash Costs
Operator's salary . . . .
Other wages & salaries . .

Plants & seeds to grow on . .
Pots & growing containers . .
Fuel for production heat . .
Peat, soil, shavings, etc . .
Fertilizer & lime . . . .
Pesticides & other chemicals.
Packing boxes & supplies . .
Other production supplies . .

Repairs & maintenance . . .
Equipment operating costs . .

Travel & entertainment . .
Insurance . . . . . .
Telephone . . . . . .
Electricity . . . . .
Taxes, licenses, bonds . .
Advertising . . . . .
Rent: land and/or buildings .
Other cash expenses . . .
Total cash costs . . .


6.36
27.14


16.89
4.73
0.73
3.28
1.97
2.11
2.74
2.78

2.40
1.24

0.87
1.68
1.07
0.59
0.53
1.05
1.18
6.48
85.81


Non-Cash Costs
Depreciation: mach & equip. ... 2.02
Depreciation: bldgs, fences, wells. 2.58
Inventory decrease in supplies. .. 0.00
Interest on capital, 12% .... 9.58
Total non-cash costs. . . . 14.19


5.01
28.58


17.26
4.71
0.82
3.27
2.11
2.31
2.90
3.05

2.58
1 .07

0.78
1.71
0.98
0.52
0.53
1.07
1.15
7.43
87.84


1.68
2.11
0.00
8.37
12.16


15.39
17.45

6.84
5.52
0.67
2.04
1.15
1.01
2.13
1.60

1.31
1.43


1.62
1.94
1.12
1.17
0.41
0.93
1.75
1.66
67.16


6.59
8.96
0.00
17.30
32.84


Total All Costs . . . . .


cash during this accounting period.


100.00 100.00


100.00









Costs Per Square Foot of Total Bed and Bench Space (Table 8)


While expenses as a percent of total costs facilitate comparing operating
statements, they do not allow easy comparison of relative growing costs between
nurseries. But costs per square foot do. The traditional basis for comparison
is costs per square foot of total bed and bench space. These were obtained by
dividing each of the dollar cost figures in Table 6 by the appropriate area in
production figure from Table 1C, "Total bed and bench space".
Salaries and Wages
Salaries and wages (includes operator) per square foot of total bed and
bench space averaged 42.0 cents for the 24 nurseries. For the largest ones,
they were 38.8 cents, or about 3 cents less than the average. The smallest nur-
series had 74.2 cents, or 32 cents above the average.
Production Supplies
Production supplies ("plants and seeds" through "other production supplies")
averaged 44.2 cents. For the eight largest nurseries, they were 42.1 cents,
about 2 cents less than the average. The smallest nurseries had 47.4 cents, or
about 3 cents over the average.
Other Production Costs
Other production costs ("repairs" and "equipment operating costs") averaged
4.6 cents in the 24 nurseries. For the eight largest ones, they were 4.2 cents.
The smallest nurseries had 6.2 cents, a cent and a half above the average.
Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 16.9 cents per
square foot. For the eight largest nurseries, they were 16.4 cents, a half cent
less. The smallest ones had 24.0 cents, 7.1 cents above the average.
Total Cash Costs
Total out-of-pocket costs per square foot of total bed and bench space aver-
aged 107.7 cents ($1.08). For the eight largest nurseries, they were 101.4
cents, or 6.3 cents below the average. The smallest ones had 151.6 cents, or
almost half a dollar above the average.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") amounted to
17.8 cents per square foot. Larger nurseries had 14.0 cents, three cents under
average. The smallest nurseries had 74.2 cents, 4 times higher than average.










Total All Costs
The total for all costs and allowances averaged 125.5 cents ($1.25) in the
24 nurseries. For the eight largest ones, they were 115.5 cents, or 10 cents
below the average. The smallest nurseries had 225.8 cents, or $1.00 over the
average cost per square foot of total bed and bench space.


Table 8.--Costs per square foot of total bed and bench space, 24 wholesale
foliage plant nurseries in Dade Co., Florida, 1984.

Average Average Average
Item all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - Cents - - - - -


Cash Costs
Operator's salary . . . . .
Other wages & salaries, . . .

Plants & seeds to grow on .. ..
Pots & growing containers . . .
Fuel for production heat. . .
Peat, soil, shavings, etc . . .
Fertilizer & lime . . . . .
Pesticides & other chemicals . .
Packing boxes & supplies. . . .
Other production supplies . . .

Repairs & maintenance . . . .
Equipment operating costs . . .


Travel & entertainment .
Insurance . . . . .
Telephone . . . . .
Electricity . . . .
Taxes, licenses, bonds.. .
Advertising . . . .
Rent: land and/or buildings
Other cash expenses . .
Total cash costs. . .

Non-Cash Costs
Depreciation: mach & equip.


Depreciation: bldgs, fences, wells.
Inventory decrease in supplies. .
Interest on capital, 12% . . .
Total non-cash costs. . . .

Total All Costs. . . . . .


8.0
34.1


21.2
5.9
0.9
4.1
2.5
2.7
3.4
3.5

3.0
1.6

1 .1
2.1
1.4
0.7
0.7
1.3
1.5
8.1
107.7


. . 2.5


3.2
0.0
12,0
17.8


5.8
33.0


19.9
5.4
1.0
3.8
2.4
2.7
3.4
3.5

3.0
1.2

0.9
2.0
1 .1
0.6
0.6
1.2
1.3
8.6
101.4


1.9
2.4
0.0
9.7
14.0


34.8
39.4

15.5
12.5
1.5
4.6
2.6
2.3
4.8
3.6


3.7
4.4
2.5
2.6
0.9
2.1
4.0
3.8
151.6


14.9
20.2
0.0
39.1
74.2


125.5 115.5


225.8










Costs Per Square Foot of Propagating and Finishing Space (Table 9)


Costs per square foot of total bed and bench space is the traditional basis
for comparisons between nurseries. However, costs per square foot of propaga-
ting and finishing space are more appropriate for estimating individual plant
growing costs, or for comparing growing cost efficiency between nurseries.
These costs were obtained by dividing the dollar cost figures in Table 6 by the
plant production area from Table ID, "Propagating and finishing bed and bench
space".
Salary and Wages
Salaries and wages (includes operator) per square foot amounted to 48.9
cents in the 24 nurseries. For the eight largest ones, they averaged 45.7
cents, or about 3 cents below the average. The smallest nurseries had 83.2
cents, or 34.3 cents greater than the average.
Production Supplies
Production supplies ("plants and seeds" through "other production supplies")
averaged 51.4 cents per square foot. For the largest nurseries, they were 49.5
cents, or nearly 2 cents below the average. The smallest ones had 53.1 cents,
or about 2 cents above the average.
Other Production Costs
Other production costs ("repairs" and "equipment operation") averaged 5.3
cents. For the largest nurseries, they were 5.0 cents. The nine smallest nurs-
eries had 6.9 cents, or 1.6 cents above the average.
Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 19.6 cents.
For the largest nurseries, they were 19.2 cents. The nine smallest nurseries had
26.9 cents, or more than 7 cents higher than the average.
Total Cash Costs
Total cash costs in the 24 nurseries averaged 125.2 cents ($1.25) per square
foot of propagating and finishing space. For the eight largest nurseries, they
were 119.4 cents, down about 6 cents. The nine smallest nurseries had 170.1
cents, or 45 cents above the average.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged 20.7
cents. The largest nurseries had 16.5 cents, or about four cents under the av-
erage, and smallest nurseries had 83.2 cents, mor-e than four times the average.









Total All Costs
Total costs per square foot of propagating and finishing space averaged
$1.46. For the largest nurseries, they were $1.36, or 10 cents below the aver-
age. The smallest ones had $2.53, or 1.7 times the average.




Table 9.--Costs per square foot of propagating and finishing space,
24 Wholesale nurseries in Dade Co., Florida, 1984.

Average Average Average
Item all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - Cents - - - - -


Cash Costs
Operator's salary . . . .
Other wages & salaries. . .

Plants & seeds to grow on . .
Pots & growing containers . .
Fuel for production heat .
Peat, soil, shavings, etc . .
Fertilizer & lime . . . .
Pesticides & other chemicals. .
Packing boxes & supplies .
Other production supplies . .

Repairs & maintenance . . .
Equipment operating costs . .

Travel & entertainment . .
Insurance . . . . . .
Telephone . . . . . .
Electricity . . . . .
Taxes, licenses, bonds. . .
Advertising . . . . .
Rent: land and/or buildings .
Other cash expenses . . .
Total cash costs. . . .


9.3
39.6


24.6
6.9
1 1
4.8
2.9
3.1
4.0
4.1

3.5
1.8

1.3
2.5
1.6
0.9
0.8
1.5
1.7
9.4
125.2


Non-Cash Costs
Depreciation: mach & equip. . . 3.0
Depreciation: bldgs, fences, wells. 3.8
Inventory decrease in supplies. .. 0.0
Interest on capital, 12% .... 14.0
Total non-cash costs. . . ... 20.7


6.8
38.9

23.5
6.4
1.1
4.4
2.9
3.1
3.9
4.2


1 .1
2.3
1.3
0.7
0.7
1.4
1.6
10.1
119.4


2.3
2.9
0.0
11.4
16.5


39.0
44.2

17.3
14.0
1.7
5.2
2.9
2.6
5.4
4.0


4.1
4.9
2.8
3.0
1.1
2.4
4.4
4.2
170.1


16.7
22.7
0.0
43.8
83.2


Total All Costs . . . . .


r


145.9 136.0


253.3










Costs Per Dollar of Sales Adjusted for Inventory Change (Table 10)


Costs per square foot of growing area are important for comparing relative
costs between nurseries, and for estimating individual plant growing costs.
However, they do not incicate the profit potential of a nursery operation as
well as do costs per dollar of sales. Adjusting sales for changes in inventory
value shows how the business is doing in total, not just cash-wise. These fig-
ures were developed by dividing the dollar costs shown in Table 6 by the appro-
priate figure from Table 1B, "Value of own plants sold adjusted for change in
plant inventory value".
Salaries and Wages
Salaries and Wages (includes operator) averaged 31.5 cents per dollar of
sales after adjusting for changes in inventory. For the eight largest nurser-
ies, they were 30.5 cents, or about one cent less than the average. The small-
est nurseries had 39.9 cents, or 8.4 cents above the average.
Production Supplies
Production supplies ("plants and seeds" through "other production supplies")
averaged 33.2 cents. For :he eight largest nurseries, they were almost the same
at 33.1. The smallest nurseries had 7.6 cents below the average, or 25.5 cents.
Other Production Supplies
Other production costs ('repairs" and "equipment operating costs") averaged
3.4 cents per dollar of adjusted sales. For the eight largest nurseries, they
were almost the same, 3.3 cents. The ismaliest nurseries also had 3.3 cents.
Administrative and Overhead
These costs ("travel" through "other cash expense") amounted to 12.6 cents
per dollar of adjusted sales. For the eight largest nurseries, they were 12.9
cents. The smallest nurseries again had the same, 12.9 cents.
Total Cash Costs
Total cash costs per dollar of adjusted sales averaged 80.7 cents. For the
eight largest nurseries, :hey were 79.8 cents, or a cent below the average per
dollar of adjusted sales. The smallest nurseries had 81.6 cents, or one cent
above the average.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged 13.3
cents. For the eight largest nurseries, they were 11.0 cents, or more than two







21


cents below average. Smaller ones had much higher non-cash costs 39.9 cents, or
22.6 cents over average.
Total All Costs
Total costs per dollar of adjusted sales averaged 94.0 cents. For the larg-
er nurseries, they were 90.8 cents. The smallest ones had 121.5 cents.



Table 10.--Costs per dollar of sales adjusted for change in plant inventory,
24 foliage plant nurseries in Dade Co., Florida, 1984.

Average Average Average
Item all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - Cents - - - - -


Cash Costs
Operator's salary . . .
Other wages & salaries . .

Plants & seeds to grow on .
Pots & growing containers .
Fuel for production heat. .
Peat, soil, shavings, etc .
Fertilizer & lime . . .
Pesticides & other chemicals.
Packing boxes & supplies..
Other production supplies .

Repairs & maintenance . .
Equipment operating costs .

Travel & entertainment . .
Insurance . . . . .
Telephone . . . . .
Electricity . . . . .
Taxes, licenses, bonds . .
Advertising . . . . .
Rent: land and/or buildings .
Other cash expenses . . .
Total cash costs . .


6.0
25.5


15.9
4.5
0.7
3.1
1.9
2.0
2.6
2.6

2.3
1.2

0.8
1.6
1.0
0.5
0.5
1.0
1 .1
6.1
80.7


Non-Cash Costs
Depreciation: mach & equip. . . 1.9
Depreciation: bldgs, fences, wells. 2.4
Inventory decrease in supplies. .. 0.0
Interest on capital, 12/ . . 9.0
Total non-cash costs. . . ... 13.3


4.6
25.9

15.7
4.3
0.7
3.0
1.9
2.1
2.6
2.8

2.3
1.0


0.7
1.6
0.9
0.5
0.5
1.0
1.0
6.7
79.8


1.5
1.9
0.0
7.6
11.0


18.7
21.2

8.3
6.7
0.8
2.5
1.4
1.2
2.6
1.9


2.0
2.4
1.4
1.4
0.5
1 .1
2.1
2.0
81.6


8.0
10.9
0.0
21.0
39.9


Totat All Costs . . . . .


~


94.0 90.8


121.5








Costs Per Dollar of Sales (Table 11)


While total business position is indicated by costs per dollar of sales ad-
justed for changes in inventory value, bill paying ability depends upon costs
relative to cash received. These figures were developed by dividing the dollar
costs shown in Table 6 by the appropriate figure from Table 1A, "Value of own
plants sold".
Salaries and Wages
Salaries and wages (includes operator) amounted to 34.3 cents per dollar of
cash received. For the eight largest nurseries, they were 32.9 cents, or one
and a half cents less than the average. The smallest nurseries had 57.0 cents,
or 22.7 cents over average.
Production Supplies
Production supplies("plants and seeds" through "other production supplies")
averaged 36.2 cents per dollar of cash sales. For the eight largest nurseries,
they were about the same, 35.7 cents. The smallest nurseries had 36.4 cents.
Other Production Costs
Other production costs ("repairs" and "equipment operating costs") averaged
3.7 cents per dollar of cash received. For the eight largest nurseries, they
were 3.6 cents, or a tenth of a cent lower. The smallest nurseries had 4.8
cents, a cent higher.
Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 13.8 cents per
dollar of sales. For the eight largest urseries, they were 13.9 cents, or a
cent higher. The smallest nurseries had 18.4 cents, or 4.6 cents above average.
Total Cash Costs
Total cash costs averaged 88.0 cents per dollar of cash received. For larg-
er nurseries, they were 86.0 cents, or two cents lower than average. Thus, the
24 nursery average and the largest nurseries show.'ed a balance of 12 cents and 14
cents, respectively after paying current operating costs. The smallest ones had
116.6 cents cash costs per dollar of cash received. This was 28.6 cents over
the average, and lacked 16.6 cents of being able to cover current bills.
Non-Cash Costs
Non-cash costs and allowances for the year averaged 14.5 cents per dollar of
sales. This was two and a half cents more than the cash received. Larger nur-
series had 11.9 cents in non-cash costs and allowances. Smaller nurseries had






23


much higher non-cash costs and allowances, 57 cents per dollar of sales.
Total All Costs
Total costs averaged 102.5 cents, or 2.5 cents more than the cash received.
Largest nurseries averaged 97.9 cents. Smallest nurseries averaged 173.6 cents.
In terms of bill paying ability, the smallest nursery sales average did not
cover cash costs. Only the largest nursery average covered all cash costs and
non-cash allowances.

Table 11.--Costs per dollar of sales (no adjustment for change in plant inven-
tory), 24 foliage plant nurseries in Dade Co., Florida, 1984.

Average Average Average
Item all 24 8 large 9 small Your
nurseries nurseries nurseries nursery
- - - - Cents - - - - -


Cash Costs
Operator's salary . . . .
Other wages & salaries . .

Plants & seeds to grow on . .
Pots & growing containers . .
Fuel for production heat . .
Peat, soil, shavings, etc . .
Fertilizer & lime . . . .
Pesticides & other chemicals..
Packing boxes & supplies . .
Other production supplies . .

Repairs & maintenance . . .
Equipment operating costs . .

Travel & entertainment . .
Insurance . . . . . .
Telephone . . . . . .
Electricity . . . . .
Taxes, licenses, bonds . .
Advertising . . . . .
Rent: stand and/or buildings .
Other cash expenses . . .
Total cash costs . . .


Non-Cash Costs
Depreciation: mach & equip.


Depreciation: bldgs, fences, wells.
Inventory decrease in supplies. .
Interest on capital, 12 . . .
Total non-cash costs. . . .

Total All Costs. . . . . .


6.5
27.8

17.3
4.9
0.7
3.4
2.0
2.2
2.8
2.9

2.5
1.3


0.9
1.7
1 .1
0.6
0.5
1.1
1.2
6.6
88.0


. . 2.1


2.6
0.0
9.8
14.5


102.5


4.9
28.0


16.9
4.6
0.8
3.2
2.1
2.3
2.8
3.0

2.5
1.1

0.8
1.7
1.0
0.5
0.5
1.0
1.1
7.3
86.0


1.6
2.1
0.0
8.2
11.9

97.9


26.7
30.3

11.9
9.6
1.2
3.5
2.0
1.8
3.7
2.8


2.8
3.4
2.0
2.0
0.7
1.6
3.0
2.9
116.6


11.4
15.6
0.0
30.0
57.0


173.6







Income Summary (Table 12)


This section concentrates on developing net nursery income and allocating it
between the time and effort of the owner-operator and a return on the money in-
vested in the operation. After all is said and done, it is for a payment on his
or her time that a nursery operator works, and it is for a return to capital
that nursery operators and lending institutions invest funds in nursery opera-
tions.
Total Gain
Total gain refers to the total effect of the year's operation. It is the
sum of plant sales, changes in plant and supply inventory values, and miscella-
neous income. Miscellaneous income refers to income received from sources other
than plant sales. It would include rent income, interest income, delivery in-
come, boxing charges, and income from the sale of fertilizer and supplies.
Total gain for the 24 nurseries averaged $922,590. Larger nurseries aver-
aged almost 2.5 times that amount, or $2,340,493. Smaller nurseries had 13 per-
cent of the average, or $119,557.
Net Nursery Income
Net nursery income is the total return for the year for the time and mana-
gerial skills of the operator plus the capital invested in the operation. To
obtain it, all cash costs from Table 6 except the operator's salary, and all
non-cash costs shown there except interest on capital, are subtracted from total
gain. The result is net nursery income, or income for all the time and capital
investment supplied by the owner-operator.
For the 24 nurseries, it averaged $198,697. For the eight largest nurser-
ies, it was $513,774, or 2.6 times the average. Smaller nurseries had $22,736,
or 11 percent of the average.
Return to Capital
From net nursery income is subtracted the salary or time value of the owner-
operator to obtain that part of net nursery income attributable to capital.
This is the earnings of the money invested in the nursery. Dividing it by the
value of capital invested gives the rate of return earned by the investment.
When the owner and operator are the same person, dividing net nursery income
between the operator and return to capital may not seem important. But when the
owners are outside investors, then accurate division is important. In either
case, rate of return is a common indicator for evaluating an investment or for
selecting between alternative investment opportunities.











Return to capital for the 24 nurseries amounted to $143,967, or a return of


20.9 percent.


For the eight largest nurseries, it was $408,154 for a 27.7 per-


cent return on the capital investment. The smallest nurseries averaged $591 for
a 0.3 percent return on the capital invested.





Table 12.--Income summary, 24 wholesale foliage plant nurseries in Dade Co.,
Florida, 1984.


Item


Value of own plants sold - -
Plant inventory change - - -
Supply inventory change- - -
Miscellaneous cash income- -
Total gain(f)- - - - - -


Average
Unit all 24
nurseries

$ 839,771
$ 76,343
S$ 186
S 6,290
S 922,590


Average Average
8 large 9 small
nurseries nurseries
- - Dollars - -
2,153,330 82,879
169,524 35,546
1,996 1,132
15,643 0
2,340,493 119,557


Deduct cash costs less op salary
Deduct non-cash costs less int -
Total deductions - - - -

Net nursery income(g)- - - -
Deduct op salary or time value -

Return to capital(h)- - - -
Rate of return to capital(i)- -


S( 684,235)
S( 39,657)
S( 723,892)

$ 198,697
$( 54,730)

S 143,967
20.9


(1,746,855)
( 79,864)
(1 ,826,720)

513,774
( 105,619)


( 74,459)
( 22,362)
( 96,821)


( )
( )
( )


22,736
( 22,145)(


408,154
27.7


(f) Total gain--the sum of plant sales, change in plant and supply inven-
tories, and miscellaneous income. It represents the total effect of the year's
operation, be it in the form of cash or change in inventory value.

(g) Net nursery income--the net effect of the year's operation. To obtain
it, subtract all cash costs (except operator's salary), and all non-cash allow-
ances (except interest on capital) from total gain. The result is the return
for the time and managerial skills of the operator, and for the use of the capi-
tal invested in the operation.

(h) Return to capital--the portion of net income that is left after subtrac-
ting the salary or time value of the operator. It is what the owned capital
earned.

(i) Rate of return to capital--return to capital divided by the value of
owned capital. It is the rate of return earned on the capital invested.


Your
nursery









Factors Associated With Level of Profit (Table 13)


In this section, information presented earlier is re-grouped to concentrate
attention on factors that are generally deemed related to level of profit in a
foliage nursery. The factors are presented in the same sequence that they ap-
peared before. But here, the average for all 24 nurseries is compared with the
average for the eight most profitable and the eight least profitable of the nur-
series participating in the program. As will be seen, profit or lack of profit
does not depend upon performance in any single area, but, rather, on the balance
of performance in all areas. Nevertheless, nursery operators analyzing their
own operations may find this section especially valuable for indicating the
general area of their business needing additional study and analysis.
"Net nursery income" from Table 12 was selected as the indicator for level
of profit. Average for all 24 nurseries was $198,697. The most profitable
third of the nurseries averaged 2.6 times this amount, or $513,774. The least
profitable third averaged -S4,583. The following compares the average for these
three groupings of foliage nurseries using one indicator from most of the pre-
ceeding tables. A more complete analysis would use all indicators listed for
each table. For in most cases, each indicator measures things from a little
different angle.
Size of Business
The indicator of size of business selected from Table 1 was "Value of own
plants sold". The 24 nurseries average 5839,771. The most profitable third
had $2,153,330 in sales, or 2.6 times more. The least profitable group averaged
$132,727, or about 16 percent of the average. This does not mean that small
businesses cannot be profitable, but it does indicate that largest profits tend
to be associated with higher dollar volumes of business.
Production Rate
The indicator of rate of production selected from Table 2 was "Value of own
plants sold per square foot of total bed and bench space". In general, other
things being equal, increasing sales per square foot of total bed and bench
space should increase the profitability of a nursery operation, hence is desir-
able. The average for all 24 nurseries was $1.22 per square foot. The most
profitable third and the least profitable third had $1.18.








Lower sales per square foot of total bed and bench space can result from a
number of things, such as devoting excessive space to stock plants, letting
plants continue to grow after reaching salable size, letting space sit vacant
too long between the time a plant is sold and another is put in place to start
growing again, selecting varieties that grow slower or are priced low relative
to their growing time and space requirements, and having disease and quality
problems that reduce yields of salable plants. In addition, nursery layout and
fertilizing and growing techniques can alter the time and space used for the
same crop in two different nurseries. Also, markets and marketing programs can
alter the returns received by two different nurseries for the same crop.

Table 13.--Factors associated with level of profit, 24 wholesale foliage plant
nurseries in Dade Co., Florida, 1984.

Average Average 8 Average 8
Item Unit all 24 most profit least profit Your
nurseries nurseries nurseries nursery
Level of profit
Net nursery income (Table 12) S 198,697 513,774 -4,583
Factors associated with level of profit
Size of business (Table 1)
Value of own plants sold - $ 839,771 2,153,330 132,727

Production rate (Table 2)
Sales/sq ft of total
bed and bench space - - $ 1.22 1.18 1.18

Labor efficiency (Table 3)
Own plant sales/employee - $ 43,332 45,181 26,868

Space use intensity (Table 4)
Annual turnover of plant
inventory value - - -- % 247 289 114

Use of capital (Table 5)
Annual turnover of owned
capital value - -- - 122 146 46

Level of costs (Table 8)
Cost/sq ft of total bed space- $ 1.25 1.15 1.90

Cost efficiency (Table 10)
Cost/$ sales adjusted for
change in inventory value - $ .94 .91 1.44

Growth in the business
Increase in sales and plant
inventory over last year - $ 147,958 357,834 18,201









Labor Efficiency
The indicator of efficiency in the management and use of labor selected from
Table 3 was "value of own plants sold per employee". If all other things are
equal, then higher sales per person involved is desirable. Average for all 24
nurseries was $43,332 per person. Sales were 4 percent higher than average at
$45,181 for the most profitable third, and 62 percent of the average at $26,868
for the least profitable third of the nurseries. Higher sales per employee
viewed alone at this point in time might seem to indicate true efficiency. On
the other hand, if viewed together with other indicators, it might instead show
less than optimum number of employees for volume of plants being handled. This
could result in tardy or untimely plant care, hence, slower growth and lower
quality plus a failure to restock empty space promptly. In this case, other in-
dicators such as production rate, space use intensity, capital turnover, and
costs per square foot would not support the labor efficiency indicator.
Lower sales per employee can result during periods of rapid expansion when
extra help is needed to care for largest numbers of plants before they begin
reaching salable size. Or it can also be the result of difficult economic times
when sales are slow, but plant care must go on. Differences between nurseries
can be the result of differences in investment in labor saving capital items,
the result of any or all of the factors noted above that lower production rate,
or the result of poor management practices in the planning and utilization of
labor.
Space Use Intensity
The indicator of intensity in the use of space selected from Table 4 was
"Annual turnover of plant inventory value". Generally speaking, largest percent-
age turnover numbers are desirable, because they indicate that the value of mon-
ey tied up on inventory is being revolved faster. Average turnover was 247 per-
cent, meaning that the value of own plants sold was 2,47 (247 percent) times the
average investment in plant inventory. For the most profitable third, it was
289 percent, or 42 percent more than the average. For the least profitable
third, it was 46 percent of the average at 114.
Reduced intensity of space use may be the result of things that increase the
amount of money invested in inventory such as excessive investment in stock
plants, rapid expansion of the business so that plant values are up although
accompanying sales have not yet started, poor labor management so there is not









enough labor at crucial times i ;. l.l re- i ii ng empty .l Jace, selecting vari-
eties that grow slowly relative to the price they receive, inadequate fertiliza
tion program resulting in slow plant growth, or holding plants too long after
they reach salable size. Or it can be the result of any of the items that re-
duce sales volume for a given nursery as mentioned earlier. Either over or under
valuing inventory can also change the intensity of use figure. However, varia-
tions in the indicator for this reason are fictlcious, and do not provide a
sound basis for management evaluations or decisions.
Use of Capital
The indicator for efficiency in the use of capital selected from Table 5 was
"Annual turnover of owned capital value". This is expressed in percent. In gen-
eral, largest percentage turnover numbers are desirable, for they indicate
greater sales per dollar of investment in the nursery,
Annual turnover of owned capital averaged 122 percent, meaning that the val-
ue of own plants sold during the year amounted to almost one and a quarter times
the capital invested. For the most profitable third, it was 146 percent. The
rate for the least profitable third was about a third of the average, 45.9.
Problems that lower turnover rate include any of the items already mentioned
that lower production rate hence sales volume for a given nursery investment.
Low capital turnover Is particularly common in nurseries just getting started,
or in nurseries that are expanding rapidly. Excessive investments in land,
labor saving machinery and equipment, or expensive (though maybe unnecessary)
niceties will also tend to lower -apitai turnover rate.
Level of Costs
The indicator of level of costs selected was "Costs per square foot of total
bed and bench space" from Table 8. This is a traditional indicator for compar-
ing costs between nurseries. Other things being equal, a lower cost per square
foot is desirable.
Costs for total bed and bench space averaged $1.25, or 3,5 cents higher than
sales per square foot before adjusting for changes in plant inventory value.
This means that sales did not cover all cash costs plus all non-cash allowances
noted in Table 8. For the mnot Drofltable third, costs were 51,15 per square
foot or 10 cent- less than the average and 2 cents less than sales per square
foot. The least profitable third averaged $1.90, which was 72 cents per square
foot more than sales.









Problems that cause posts per square foot to increase include inefficient
planning and utilization of labor, insufficient investment in labor saving capi-
tal items, destruction or theft of supplies and plants, not checking for best
price before purchasing needs, and not carefully managing the nursery operation.
Other causes of increased costs may not be a problem if they result in increased
revenue. One example might be increased costs for sleeves and packaging in
order to satisfy the requirements of q premium market.
Cost Efficiency
The indicator of cost efficiency selected was "Cost per dollar of sales ad-
justed for change in plant inventory". This shows how well the nursery did in
total (cashwise plus change in inventory values). In general, lower costs per
dollar of sales are desirable.
Average costs were 94 cents. For the most profitable third, costs were 91
cents. The least profitable third had $1,44 per dollar received. Thus, this
group lacked more than 40 cents per dollar of sales of being able to cover all
cash plus non-cash costs and allowances incurred during the year.
Rising costs per dollar of sales are common during periods of rapid expan-
sion. But this also can occur as a result of the things mentioned earlier that
affect rates of production, level of costs, and labor efficiency. It can be an
outgrowth of some combination of insufficient sales for the size of the nursery
being operated and lack of attention to cost control and efficient nursery oper-
ation.
Growth in the Business
The indicator selected was the sum of the increase in plant sales plus in-
crease in plant inventory value. In general, a steady growth in the business is
desirable.
On the average, growth was valued $147,958, This was about 18 percent of
the annual sales volume of $839,771, The most profitable third increased
$357,834, about 17 percent-of annual sales. The least profitable third of the
nurseries increased $18,201, or about 14 percent of sales.
Growth in sales of a business can, of course, be due in part to inflationary
price increases. It can also be the result of all the things already mentioned
that increase sales volume or plant inventory for a given operation. To stay
healthy, businesses do need to grow, at least enough to keep up with inflation.
But at the same time, growth should be planned and orderly so that it contri-









butes to the profitability of an operation. By way of contrast, t.) rapid a.
expansion program can result in excessive increases in costs and strong needs
for cash before the new plants have reached salable size. The inventory in-
crease may look good on paper, but prove inadequate for paying the bills.
Growth, though desirable in an economic sense, needs to be carefully planned and
executed.


Range of Figures (Table 14)


In this section, the average for all 24 nurseries is repeated for ease of
comparison. The remainder of the table differs from the previous section in
that the three best and three worst numbers for each factor were averaged to

Table 14.--Range of figures on factors associated with level of profit, 24
wholesale foliage plant nurseries in Dade Co., Florida, 1984

Average 3 best 3 worst
Item Unit all 24 factor factor Your
nurseries average average nursery
Level of profit
Net nursery income (Table 12) S 198,697 836,628 -24,119
Factors associated with level of profit
Size of business (Table 1)
Value of own plants sold - S 839,771 3,721,172 25,071

Production rate (Table 2)
Sales/sq ft of total - - S 1.22 6,56 0.43

Labor efficiency (Table 3)
Own plant sale/employee - $ 43,332 58,036 9,425

Space use intensity (Table 4)
Annual turnover of plant inv. % 247 1,187 57

Use of capital (Table 5)
Annual turnover of owned cap, 122 221 30

Level of costs (Table 8)
Cost/sq ft of total bed space $ 1.26 0.69 9.71

Cost efficiency (Table 10)
Cost/$ sales adjusted for
change in inventory value - $ 0.94 0.60 1.76

Growth in the business
Increase in sales & plant - $ 147,958 820,898 741








provide the range of high-low figures shown, in the previous section, figures
for all factors were for the same groups ot high profit and low profit nurs-
eries. This section shows the average for the best three and worst three num-
bers regardless of the nursery or profit level to which they belong.
As can be seen in Table 14, quite a range of figures was found for most of
the factors. Nursery operators analyzing their own operation should be suspi-
cious about any of their figures that fall outside these ranges. The discussion
of things that contribute to variations in the figures in the previous section
also apply here.




CONCLUDING COMMENTS


Nursery operators who are interested in seeing how they compare with those
participating in the Florida Nursery Business Analysis Program may calculate
their own numbers as shown and write them on the lines of each table provided
for this purpose. Doing so should provide some valuable insight into the busi-
ness side of operating a foliage nursery. It should improve management deci-
sions concerning things that affect the profitability of the nursery operation.
Nursery operators who find this kind of information useful, but have diffi-
culty finding the time or energy to engage in the tedium of doing their own cal-
culation may wish to consider becoming a participant in the program. If you
would like to do so, contact your ornamental agent in your nearby county Exten-
sion office, or contact the author In Gainesville.




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