• TABLE OF CONTENTS
HIDE
 Front Cover
 Abstract
 Table of Contents
 List of Tables
 List of Figures
 Introduction
 Definitions
 Data and results
 Conclusion














Group Title: 1987- Florida nursery business analysis series
Title: Business analysis of foliage plant nurseries in Dade County, Florida
ALL VOLUMES CITATION THUMBNAILS PAGE IMAGE ZOOMABLE
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00014561/00003
 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: 1986
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.
 Record Information
Bibliographic ID: UF00014561
Volume ID: VID00003
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: ltqf - AAA7023
ltuf - AHN4358
oclc - 23593531
alephbibnum - 001610008
lccn - sn 91022506

Table of Contents
    Front Cover
        Front Cover
    Abstract
        Page i
    Table of Contents
        Page ii
    List of Tables
        Page iii
    List of Figures
        Page iv
    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
        Page 26
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
    Conclusion
        Page 37
Full Text








Business Analysis of Foliage Plant
Nurseries in Dade County,
Florida, 1986


Seintral Science


lubrar;

Uni v:^: i *''''rff


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


December 1987


I















ABSTRACT


Average sales, costs and returns information are presented for 21 wholesale
foliage plant nurseries in Dade County, Florida for the tax year of 1986.
Average value of plant sales was $1,126,923. Cash costs including a return to
the operator averaged $1,024,148. Non-cash costs and allowances including a 12
percent return on investment amounted to another $194,621. Deducting the return
to operator and return on investment left total costs of $1,005,367. After
adjustments for change in plant inventory value and additions for miscellaneous
income, net nursery income averaged $223,067, and return to capital averaged
12.79 percent. Comparable information is presented also for the average of the
seven largest and six smallest nurseries in the study.

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












ACKNOWLEDGEMENTS

This report was made possible by the cooperating 21 foliage plant nursery
operators who made available their production and accounting records on a con-
fidential basis for analysis and averaging. Acknowledgement and appreciation of
the help and encouragement received from participating nursery operators,
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 . . . . . . . . . . . .
LIST OF FIGURES. . . . ..... . . .. ....

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. . .
Balance Sheet . . . .
Current Assets . . .
Long Term Assets . .
Total Assets . . .
Liabilities . . .
Net Worth . . .
Total Profitability Model. .
Margin Management. . .
Asset Management . .
Leverage Management. .
Factors Associated With Level
Size of Business . .
Production Rate . .
Labor Efficiency .
Space Use Intensity .
Use of Capital . . .
Level of Costs . . .
Cost Efficiency .. ..
Growth In the Business
Range of Figures . . .
Seasonality of sales . ..
CONCLUDING COMMENTS . . .


* . .
. . .
. . .
. . .
. . .
* . .
. . .
. . .
. . .
. . .
. . .
. . .
. . .
. . .
. . .
of Profi
. . .
. . .
. . .
. . .
* . .
. . .
. . .
. . .
* . .
. . .
* . .


*These sections also contain the
Salaries and Wages
Production Supplies
Other Production Costs
Administrative and Overhead


following subcategories:

Total Cash Costs
Non-cash costs
Total all costs


Page
i
i

iv


.*










LIST OF TABLES


Table Page
1 Size of business, 21 wholesale foliage plant nurseries in Dade
County, Florida, 1986 . . . . . . . . ... . .. 5

2 Rates of production, 21 wholesale foliage plant nurseries in Dade
County, Florida, 1986 . . . . . . . . ..... . 6

3 Labor efficiency, 21 wholesale foliage plant nurseries in Dade
County, Florida, 1986 ..... . . . . . . . 7

4 The use of space, 21 wholesale foliage plant nurseries in Dade
County, Florida, 1986 . . . . . . . . 9

5 Efficiency in the use of capital, 21 wholesale foliage plant
nurseries in Dade County, Florida, 1986 ............. .11

6 Dollar costs by expense category, 21 wholesale foliage plant
nurseries in Dade County, Florida, 1986 . . . . . .... .13

7 Percent of total costs by expense category, 21 wholesale foliage
plant nurseries in Dade County, Florida, 1986 . . . .... .15

8 Costs per square foot of total bed and bench space, 21 wholesale
foliage plant nurseries in Dade County, Florida, 1986 ...... 17

9 Costs per square foot of propagating and finishing space, 21
wholesale foliage plant nurseries in Dade County, Florida, 1986 . 19

10 Costs per dollar of sales adjusted for change in plant Inventory, 21
wholesale foliage plant nurseries in Dade County, Florida, 1986 .. 21

11 Cost per dollar of sales (no adjustment for change in plant inven-
tory, 21 wholesale foliage plant nurseries in Dade County, Florida,
1986 . ... ... . . . . . . . . . . . 23

12 Income summary, 21 wholesale foliage plant nurseries in Dade County,
Florida, 1986 . . . . . .. . . . . . . 25

13 Balance sheet, 21 wholesale foliage plant nurseries in Dade County,
Florida, 1986 . . . . . . . . .. . ...... .27

14 Factors associated with level of profit, 21 wholesale foliage plant
nurseries in Dade County, Florida, 1986 . . . . . .... .31

15 Range of figures on factors associated with level of profit, 21
wholesale foliage plant nurseries in Dade County, Florida, 1986 35










LIST OF FIGURES

Figure Page
1 Total profitability model, 21 wholesale foliage plant nurseries in
Dade County, Florida, 1986 ..................... 29

2 Seasonality of sales, 21 wholesale foliage plant nurseries in Dade
County, Florida, 1986 . . . ............ ..... 36












BUSINESS ANALYSIS OF FOLIAGE PLANT NURSERIES IN DADE COUNTY, FLORIDA, 1986


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 County, Florida for 1986.
Other publications in this series includes reports on South Florida foliage
plant nurseries, Central Florida foliage plant nurseries, Florida flowering
plant nurseries, Florida woody ornamental container plant nurseries and Florida
woody ornamental field nurseries.
The nursery business analysis series was initiated in the mid-1960's.
Purposes of the 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 produc-
tion business with an estimate of input requirements and revenue potential;
4) and Providing Florida Extension personnel with data for conducting
educational programs with nursery operators.


PROCEDURE


The information and averages presented in this report are based on data
supplied by 21 nursery operators in the form of confidential production and
accounting records. Their nurseries are located throughout Dade County, Florida
They participated in the program voluntarily and do not represent a


J. ROBERT STRAIN is an extension economist and professor, and ALAN HODGES
is a research assistant, both in IFAS Food and Resource Economics Department,
University of Florida, Gainesville. DEARMAND HULL is a Dade county extension
ornamental agent.









statistically selected sample. In fact, the nursery operators participating in
the Florida Nursery Business Analysis Program are thought to represent some of
the more efficient foliage plant nurseries in the county, rather than being
typical of the foliage plant nursery industry.
Data were collected for the 1986 tax year. In some cases, data were
received for a fiscal year that did not coincide with the 1986 calendar year.
Data for fiscal years ending after July 1, 1985 and up to June 30, 1987 were
included with the 1986 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 allowance.
The value of owned capital or investment in the nursery reflects the depre-
> ciated book value of buildings, improvements, machinery and equipment. This is
a total value; related debt is not deducted in determining this value of capi-
tal owned. 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 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 nursery operator if he or she were to buy
the land in 1986, 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 21 nurseries, for the seven
S"largest" nurseries, and for the six "smallest" nurseries. The largest nur-
series had plant sales valued at $700,000 or more. The smallest nurseries had
less than $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 paid for 2080
hours a year (40 hours a week for 52 weeks a year including vacation time, if
any). The most common method for obtaining 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 current value (cost after adjusting for depreciation
taken in prior years) of capital assets, or current investment in the nursery
operation. Related debt is not deducted in this determination of current value
aof capital owned.

Capital managed: the sum of capital owned plus the value of additional
capital 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 plant sold by the value of capital (either owned or managed). It
4is annual plant sales stated in terms of percent of the capital involved.

Total gain: the sum of plant sales, changes in plant and supply inventories,
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
interest 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
capital 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-
tsures. Data in Tables 12 through 15 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 useful measures of performance. In the
tables throughout the manuscript, arithmetic inconsistencies from rounding may
be noted.


Size of Business (Table 1)


Size of business data in Table 1 is basic information. When combined with
the cost data in Table 6, it provides the nursery operator most of the data
required for developing 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 .he nursery. This averaged $1,126,923 for the 21 nurseries.
For the seven largest nurseries, it was $2,841,187 or two and a half times the
average. The smallest ones had $87,594, or about eight percent of the average.
{Adjusting sales for change in value of plant inventory (Table 1 item B) did not
alter materially these relationships.
Total bed and bench space (Table 1C) averaged 761,116 square feet for the 21
nurseries. For the seven largest nurseries, it was 1,823,126 square feet, or
2.4 times the average. The six smallest nurseries had 81,839 square feet, or
about eleven percent of the average.
Capital owned (Table 1P) averaged $1,221,150 for the 21 nurseries. For the
seven largest nurseries, it was $2,526,688, or twice the average. The six
smallest nurseries had $189,313 or almost 16 percent of the average.
Capital managed (Table 1X) averaged $1,461,106 or a fifth more than the
capital owned by the nursery operators. This difference was primarily in the
value of land. For the seven largest nurseries, it was $3,148,117, or a fourth
more than they owned. The six smallest nurseries managed 39 percent more than
the capital owned, or $263,959. For these groups, the difference was also in
the value of land rented.






Table 1.--Size of business, 21 wholesale foliage plant nurseries in Dade County,
Florida, 1986.

Item Unit Average Average Average Your
all 21 7 largest 6 smallest nursery
The one best measure
A Value of own plants sold(a) $ 1,126,923 2,841,187 87,594
Other useful indicators of size


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 Accounts receivable . .
0 Cash/checkbook balance .
SP Total owned capital . .

Capital managed(d) in:
Q Growing plants . . .
R Buildings, fences, wells
S Machinery & equipment. .
T Land . . . . . .
U Supplies . . . . .
V Accounts receivable . .
W Cash/checkbook balance .
X Total managed capital .


$ 1,221,063


2,950,547


sq ft 761,116 1,823,126


sq ft 704,677 1,691,873


sq ft 56,438

sq ft 936,417
acres 21.50


number 27.06


477,600
329,751
54,052
145,668
9,755
164,841
39,483
1,221,150


477,600
330,126
55,243
384,058
9,755
164,841
39,483
1,461,106


131,253


2,130,962
48.92


64.55


783,124
811,499
143,786
248,212
12,838
444,880
91,349
2,526,688


783,124
811,499
138,357
866,069
12,838
444,880
91.349
3,148,117


119,071


81,839


68,506


13,333

174,631
4.01


4.68


77,403
44,627
18,719
22,917
5,773
4,408
15,466
189,313


77,403
45,940
18,719
96,250
5,773
4,408
15 466
263,959


(a) Value of own plants sold--is the value of total plant sales minus the
cost of plants purchased for immediate resale. The cost of plant purchased for
growing-on is not deducted.
(b) Fulltime equivalent employee--is the equivalent of one person paid 2080
hours (40 hours a week for 52 weeks a year including paid vacation time, If any).
(c) Capital owned--is the current value (original cost less depreciation
taken) of capital assets, or current investment in the nursery operation. Re-
lated debt is not deducted in this determination of the value of capital owned.
(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).








Rates of Production (Table 2)


"Value of own plants sold per square foot of total bed and bench space"
(Table 1 item A divided by item C) is the traditional production efficiency
'measure used among nurseries. The average value for the 21 nurseries was $1.48.
For the seven largest nurseries, it was $1.56, or about 5 percent more than the
average. The six smallest nurseries had $1.07, or almost three quarters of the
average sales per square foot of bed and bench space. When sales were adjusted
for change in inventory value (Table 1 item B divided by item C), the
relationship remained practically the same.
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 $1.60 per square foot for the 21
"nurseries. For the seven largest nurseries, it was $1.68, or 5 percent greater
than the average. The six smallest nurseries had $1.28 which was 80 percent of
the average.


Table 2.--Rates of production, 21 wholesale foliage plant nurseries in Dade
County, Florida, 1986.


Item


Unit Average Average
all 21 7 largest


Average
6 smallest


The one best measure
Value of own plants sold per
sq ft of total bed & bench
space - - (Table 1A/1C) $ 1.48 1.56 1.07
Other useful indicators
Value of own plants sold per
sq ft adjusted for inventory
change - - (Table 1B/1C) $ 1.60 1.62 1.45

Value of own plants sold per
sq ft of propagating & fin-
ishing space (Table 1A/1D) $ 1.60 1.68 1.28
--- adjusted for inventory
change - - (Table 1B/1D) $ 1.73 1.74 1.74

Value of own plants sold per
acre - -- (Table 1A/1G) $ 52,422 58,078 21,850
--- adjusted for inventory
, change - - (Table 1B/1G) $ 56,801 60,314 29,701

Pr= =-I' r===t = -=I==== I


Your
nursery


--r r --- ---- *


- -







Labor Efficiency (Table 3)


"Value of own plants sold per employee" (Table 1A divided by 1H) was
selected as the one best measure of labor efficiency. This averaged $41,650 per
employee for the 21 nurseries. For the seven largest nurseries, sales averaged
$44,012, or almost six percent more than the average. The six smallest
nurseries had $18,719 in sales per employee, or close to half of the average.
Adjusting for change In plant inventory value (Table 1B divided by 1H) slightly
increased the average for all 21 nurseries to $45,130. For the seven largest
nurseries, this increased their sales per person to $45,706. The smallest
nurseries were up to $25,446 per person.
Total bed and bench space per employee (Table 1C divided by 1H) averaged
28,130 square feet. For the seven largest nurseries, it was about the same,
28,242 square feet. The six smallest nurseries had 17,489 square feet per
person, or 62 percent of the average.
Propagating and finishing space per person (Table 1D divided by 1H) averaged
26,044 square feet per employee. For the seven largest nurseries it was again
about the same at 26,208 square feet. The smallest nurseries had 56 percent of
the average, or 14,640 square feet.


Table 3.--Labor efficiency, 21 wholesale foliage plant nurseries in Dade County,
Florida, 1986.
S------------------------------------------------------
Item Unit Average Average Average Your
all 21 7 largest 6 smallest nursery
The one best measure
Value of own plants sold per
employee - -(Table 1A/1H) $ 41,650 44,012 18,719
Other useful indicators
Value of own plants sold per
employee adjusted for change
in inventory (Table 1B/1H) $ 45,130 45,706 25,446

Total bed & bench space per
employee - (Table 1C/1H) sq ft 28,130 28,242 17,489

Propagating & finishing space
per employee (Table 1D/1H) sq ft 26,044 26,208 14,640

Total nursery area per
employee _ (Table 1F/1H) sq ft 34,609 33,010 37,320

- ----IS~llpID DIIIII~te











The Use of Space (Table 4)


The one measure selected as best for measuring the intensity of space use
was "Annual 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 dependability of the comparison.
Annual turnover of plant inventory value in the 21 nurseries averaged 236
percent. This means that annual plant sales amounted to 2.36 times the value of
plants in inventory. For the seven largest nurseries, turnover was 363 percent.
Thus, their annual plant sales were 3.63 times the value of plants in inventory.
The six smallest nurseries had a much lower turnover rate, 113 percent.
Vacant bed and bench space is a measure of efficiency of space use. Gener-
ally, reducing the percent of space vacant is desirable. However, 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 5.31 percent for the 21 nurseries. For the
largest ones, it was 5.64 percent. The smallest nurseries had 8.50 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 21 nurseries averaged 761,116 square feet of bed and bench space, which
was 81.26 percent of their total nursery area. The seven largest nurseries
averaged 85.55 percent of their total area in bed and bench space, while the
six smallest nurseries utilized 46.86 percent of their total nursery area as bed
and bench space.
Propagating and finishing area averaged 704,677 square feet for the 21 nur-
series. This was 92.58 percent of the total bed and bench space (Table 1D
divided by 1C). For the seven largest nurseries, it was 1,691,873 square feet,
or 2.4 times the average. This represented 92.80 percent of the total bed and
bench space. The six smallest nurseries had 68,506 square feet for propagating
and finishing, which was almost ten percent of the average. This space
represented 83.71 percent of their total bed and bench space. Thus, the
smallest nurseries devoted a slightly smaller proportion of their growing area
to plants for sale.
The remaining bed and bench space was devoted to stock plants. This
averaged 7.42 percent of total bed and bench space. It ranged from 7.20 percent
for the seven largest nurseries to 16.29 percent for the six smallest nurseries.



lTable 4.--The use of space, 21 wholesale foliage plant nurseries in Dade County,
Florida, 1986.

5 Item Unit Average Average Average Your
all 21 7 largest 6 smallest nursery
Intensity of space use
Annual turnover of plant in-
ventory value (Table 1A/11) % 236 363 113
Efficiency of space use
Vacant bed & bench space sq ft 40,420 102,799 6,958
- - (divided by Table 1C) % 5.31 5.64 8.50
Other useful Indicators
Total nursery area (Table 1F) sq ft 936,417 2,130,962 174,631
Total bed & bench space sq ft 761,116 1,823,126 81,836
-------- (Table 1C/F) % 81.28 85.55 46.86

Propagating & finishing bed sq ft 704,677 1,691,873 68,506
& bench space (Table 1D/1C) % 92.58 92.80 83.71

Stock plant bed 6 bench space sq ft 56,438 131,253 13,333
-------- (Table 1E/C) % 7.42 7.20 16.29








Efficiency in Use of Capital(Table 5)


A number of possibilities exist for measuring efficiency in the use of
capital. The one selected as the best single Indicator was "Annual turnover of
owned capital value." This is the percentage that results from dividing the
value of own plants sold by the value of capital owned (Table 1A divided by IP).
Annual turnover averaged 92.3 percent for the 21 nurseries. This means that
sales for the year did not quite equal the capital invested in the operation.
For the seven largest nurseries, it was 112.4, which was a 22 percent faster
turnover rate than the average. The six smallest nurseries had 46.3, which was
about half of the average turnover rate.
Managed capital turnover averaged 77.1 percent for the 21 nurseries. Thus,
there was enough additional capital being managed to reduce the turnover rate by
15 points. For the seven largest nurseries, it was 90.2 meaning there was
,enough additional capital involved in the operation to reduce the turnover rate
4by 22 points. The six smallest nurseries managed enough additional capital to
reduce turnover to 33.2 percent.
Capital invested per employee (Table IP divided by 1H) averaged $45,133 for
the 21 nurseries while capital managed (Table 1X divided by 1H) amounted to
.$54,001, almost 20 percent more. For the seven largest nurseries, capital
managed per person was $48,767, ten percent less than the average. The six
smallest nurseries managed $56,410 which was four percent more than the average.
Average capital investment per acre of nursery area (Table 1P divided by 1G)
was $56,805 for the 21 nurseries, while capital managed (Table 1X divided by 1G)
was almost 20 percent more, or $67,967. For the seven largest nurseries,
capital managed per acre was $64,352, five percent less than the average per
acre. The smallest nurseries managed $65,842 per acre, about three percent less
than the average.
Growing plants represented 32.69 percent of the capital managed by the 21
nurseries. For the largest nurseries, it was 24.88 percent. The smallest nur-
series had 29.32 percent of their capital tied up in plants. Buildings and
installations averaged 22.59 percent of the total. Largest nurseries had a
little more, 25.78 percent. Smallest ones had less, 17.40 percent.
Machinery and equipment took between 3.78 and 7.09 percent of the capital.
However, in Dade County, land required 26.29 percent of the capital on average.
Largest nurseries used 27.51 percent of their capital for land. Smallest








nurseries used more than the average for land, 36.46 percent. Accounts
receivable accounted for 11.28 percent of all capital managed. Largest
nurseries required 14.13 percent of the total. Smallest ones only had 1.67
percent of their capital utilized this way.


Table 5.--Efficiency in use of capital, 21 wholesale foliage plant nurseries in
Dade County, Florida, 1986.

Item Unit Average Average Average Your
all 21 7 largest 6 smallest nursery
The one best measure
Annual turnover(e) of owned
Capital value (Table 1A/1P) % 92.3 112.4 46.3
Other useful indicators


Annual turnover(e) of managed
capital value (Table 1A/1X)

Per employee:
SCapital owned (Table 1P/1H)
SCapital managed (Table 1X/1H)

Per acre:
Capital owned (Table 1P/1G)
Capital managed (Table IX/1G)

Managed capital per person in:
Plants- - - (Table 1Q/1H)
Buildings - (Table 1R/1H)
t Mach & equip- (Table 1S/1H)
Land- - - (Table 1T/1H)
A/R - - - (Table 1V/1H)

Managed capital per acre in:
Plants- - - (Table 1Q/1G)
Buildings - (Table 1R/1G)
Mach & equip- (Table 1S/1G)
Land- - - (Table 1T/1G)
A/R - - - (Table 1V/1G)

Percent of capital managed in:
Plants- - - (Table 1Q/1X)
Buildings - (Table 1R/1X)
Mach & equip- (Table 1S/1X)
Land- - - (Table 1T/1X)
Supplies- - (Table 1U/1X)
A/R - - - (Table 1V/1X)
Cash- - - (Table 1W/1X)
Total nursery- (Table 1X/1X)


77.1


45,133
54,001


56,805
67,967


17,652
12,201
2,042
14,194
361


22,217
15,357
2,570
17,866
454


32.69
22.59
3.78
26.29
0.67
11.28
2.70
100.00


90.2


39,140
48,767


51,649
64,352


12,131
12,571
2,143
13,416
199


16,008
16,588
2,828
17,704
262


24.88
25.78
4.39
27.51
0.41
14.13
2.90
100.00


33.2


40,457
56,410


47,222
65,842


16,542
9,818
4,000
20,569
1,234


19,308
11,459
4,669
24,009
1,440


29.32
17.40
7.09
36.46
2.19
1.67
5.86
100.00


(e) Annual turnover of capital value--the percent resulting from dividing
the value of own plants sold by the value of capital (Table 1A/1P or 1X).








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
production 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 County, Florida foliage nurseries as an
investment, either as buyers, sellers or lenders.
Salaries and Wages
The salary and wage group includes operator salary or time value. Average
was $399,004. Largest nurseries had $950,959, or 2.4 times the average. The
smallest nurseries had $63,368, or 16 percent of the average.
Production Supplies
Production supplies include the group starting with "plants and seeds"
_through "other production supplies." They averaged $446,971 for the 21 nurser-
ies. For the largest nurseries, they were $1,157,979, or 2.6 times the average.
The smallest nurseries had $33,426, or 7.5 percent of the average.
Other Production Costs
Other production costs include "facility repairs" and "equipment operating
costs." They averaged $43,271. Largest nurseries had $105,900, or 2.4 times
,the average. Smallest nurseries had $5,556, 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
business. They include the group starting with "travel and entertainment"
through "other cash expenses." They averaged $134,901 for the 21 nurseries.
For the largest nurseries, they were $347,443, 2.6 times the average. The
smallest nurseries had $13,124, or a tenth of the average.
Total Cash Costs
Total cash costs averaged $1,024,148. Larger nurseries had $2,562,281, or
2.5 times the average. Smaller ones had $115,474, or 11 percent of the average.
Non-Cash Costs
SNon-cash costs include depreciation allowances, decreases in the supply
inventory (using supplies purchased during a previous time period), and an
interest charge for the use of the capital invested in the nursery. These costs








averaged $194,621. For the largest nurseries, they were $397,378, twice the
average. The smallest ones had $43,297, or 22 percent of the average.
Total All Costs
Total costs averaged $1,218,768. Larger nurseries averaged $2,959,659, or
'2.4 times the average. Smaller ones had $158,771 (13 percent of average).


'Table 6.--Dollar costs by expense category, 21
in Dade County, Florida, 1986.


wholesale foliage plant nurseries


- inin~inmminin


Item


Average
all 21


Cash Costs
Operator's salary . . . .
Other wages/salaries . . .
Salaries s wages . . . .

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

Facility repairs/maintenance .
Equipment operating costs . .
Other production costs . .

Travel/trade shows . . . .
Insurance . . . . . .
Telephone . . . . . .
Electricity . . . . . .
Taxes/licenses/bonds . . .
Advertising . . . . . .
Rent: land and/or buildings . .
Other cash expenses . . . .
Administrative & overhead . .
TOTAL CASH COSTS . . .

Non-Cash Costs
Depreciation: mach/equipment .
Depreciation: bldgs/fences/wells.
Inventory decrease in supplies..
Interest on capital, 12% . .
NON-CASH COSTS . . . .

TOTAL ALL COSTS . . . .


66,864
332,140
399,004

217,268
54,168
8,674
42,055
27,173
25,338
35,841
36,453
446,971

32,014
11 257
43,271

9,060
8,241
10,278
6,327
8,453
10,911
10,486
71,145
134,901
1,024,148


22,534
25,548
0
146,538
194,621

1,218,768


Average Average Your
7 largest 6 smallest nursery
- - Dollars - - - - -


127,435
823,524
950,959

578,507
134,899
23,961
97,875
68,555
62,070
99,130
92,982
1,157,979

82,841
23,059
105,900

20,938
11,110
24,405
14,139
20,817
28,009
28,224
199 801
347,443
2,562,281


46,474
47,701
0
303,203
397,378

2,959,659


25,389
37 979
63,368

7,405
7,040
847
5,799
3,219
2,828
1,505
4,782
33,426

3,392
2 164
5,556

827
3,375
1,000
1,254
1,224
1,201
1,958
2,285
13.124
115,474


6,068
13,646
866
22 718
43,297

158,771


~~-=~===-


PI==llr=tPI=PltlP=--=IIIPP--DI===5=PILlr









Percent of Total Costs 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
relationships between different sizes of nurseries. But costs as a percent of
total costs 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 32.74 percent of all costs.
For the seven largest nurseries, they were about the same, 32.13 percent. For
the six smallest nurseries they were 22 percent higher at 39.91 percent.
Production Supplies
Production supplies ("plants" through "other production supplies") averaged
!-36.67 percent for the 21 nurseries. For the largest nurseries, they were 39.13
percent, or almost seven percent more than the average. The smallest nurseries
averaged 21.05 percent of total costs, or only 57 percent of the average.
Other Production Costs
Other production costs ("facility repairs" and "equipment operating costs")
averaged 3.55 percent for the 21 nurseries. For the seven largest nurseries,
-Tthey were 3.58 percent. The smallest nurseries averaged 3.50 percent. Almost
all of the difference is in expenditures for growing material and packaging
supplies.
Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 11.07 percent
for the 21 nurseries. For the seven largest ones, they were 11.74 percent. The
smallest nurseries had 8.27 percent.
Total Cash Costs
Total cash costs represented 84.03 percent of all costs and allowances for
the 21 nurseries. For the largest ones, it was 86.57 percent, or three percent
above average. The smallest ones had 72.73 percent, only 87 percent of the
average in cash costs.
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




15



cash during this accounting period. They averaged 15.97 percent of total costs
for the 21 nurseries. For the seven largest ones, they averaged 13.43 percent,
or 16 percent less than the average. Hence, the largest nurseries had a higher
percent of their total operating expense In the form of cash costs. The six
smallest nurseries had 27.27 percent of their total as non-cash costs. This was
more than one and one half times the average.

Table 7.--Percent of total costs by expense category, 21 wholesale foliage plant
nurseries in Dade County, Florida, 1986.


Item


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

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 . . .
Production supplies . . . .

SFacility repairs/maintenance . .
Equipment operating costs . . .
Other production costs . . .

Travel/trade shows . . . .
Insurance . . . . . . .
Telephone . . . . . . .
Electricity . . . . . .
Taxes/licenses/bonds . . . .
Advertising . . . . . .
Rent: land and/or buildings . .
Other cash expenses . . . .
Administrative & overhead . .
TOTAL CASH COSTS . . . .

Non-Cash Costs
Depreciation: mach/equipment . .
Depreciation: bldgs/fences/wells .
Inventory decrease in supplies. .
Interest on capital, 12% . . .
NON-CASH COSTS . . . .

TOTAL ALL COSTS . . . .


Average
all 21


5.49
27.25
32.74

17.83
4.44
0.71
3.45
2.23
2.08
2.96
2.99
36.67

2.63
0.92
3.55

0.74
0.68
0.84
0.52
0.69
0.90
0.86
5.84
11.07
84.03


1.85
2.10
0.00
12.02
15.97

100.00


Average Average
7 largest 6 smalles
- - Percent - -

4.31 15.99
27.82 23.92
32.13 39.91


19.55
4.56
0.81
3.31
2.32
2.10
3.35
3.14
39.13

2.80
0.78
3.58

0.71
0.38
0.82
0.48
0.70
0.95
0.95
6.75
11.74
86.57


1.57
1.61
0.00
10.24
13.43

100.00


Your
t nursery
- -


4.66
4.43
0.53
3.65
2.03
1.78
0.95
3.01
21.05

2.14
1.36
3.50

0.52
2.13
0.63
0.79
0.77
0.76
1.23
1.44
8.27
72.73


3.82
8.59
0.55
14.31
27.27

100.00


PI'--=IPltl~=DIIIIII='Ot~Dlllt-~~DIII=DI








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."
Salary and Wages
Salaries and wages (includes operator) per square foot amounted to 52.4
cents in the 21 nurseries. For the seven largest ones, they averaged 52.2
cents, about the average. The smallest nurseries had 77.4 cents, or 25 cents
above the average.
Production Supplies
Production supplies ("plants and seeds" through "other production sup-
-'plies") averaged 58.7 cents per square foot. For the largest nurseries, they
were 63.5 cents, or almost five cents above the average. The smallest ones had
.40.8 cents, or about 18 cents below the average, again because of lower
expenditures for-growing material and packing supplies.
Other Production Costs
Other production costs ("facility repairs" and "equipment operation") aver
aged 5.7 cents. For the largest nurseries, they were 5.8 cents. The six
smallest nurseries had 6.8 cents, or 1.1 cents above the average.
Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 17.7 cents.
For the largest nurseries, they were 19.1 cents, or 1.6 cents higher. The six
smallest nurseries had lower overhead costs, 16.0 cents, down 1.7 cents.
Total Cash Costs
Total cash costs in the 21 nurseries averaged 134.6 cents ($1.35) per square
foot of total bed and bench space. For the seven largest nurseries, they were
140.5 cents, almost six cents higher. The six smallest nurseries had 141.1
cents, or six and a half cents over average.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged 25.6
cents for the 21 nurseries. The largest nurseries had 21.8 cents. The smallest
nurseries had 52.9 cents, or double the average.








Total All Costs
Total costs per square foot of total bed and bench space averaged 160.1
cents ($1.60). For the largest nurseries, they were 162.3 cents ($1.62), or two
cents above the average. The smallest ones had 194 cents ($1.94), or 36 cents
above the average.

Table 8.--Costs per square foot of total bed & bench space, 21 wholesale foliage
plant nurseries in Dade County, Florida, 1986.

Item Average Average Average Your
all 21 7 largest 6 smallest nursery
- - - - Cents - - - - -
Cash Costs
Operator's salary ......... 8.8 7.0 31.0
Other wages/salaries ....... 43.6 45.2 46.4
Salaries & wages ........ 52.4 52.2 77.4

Plants & seeds to grow on ..... 28.6 31.7 9.0
Pots/growing containers ...... 7.1 7.4 8.6
Fuel for production heat ..... 1.1 1.3 1.0
Peat/soil/shavings, etc . . .. 5.5 5.4 7.1
Fertilizer/lime .......... 3.6 3.8 3.9
SPesticides/other chemicals .... 3.3 3.4 3.5
Packing boxes/supplies ...... 4.7 5.4 1.8
Other production supplies ..... 4.8 5.1 5.8
Production supplies ....... 58.7 63.5 40

Facility repairs/maintenance . 4.2 4.5 4.1
Equipment operating costs ..... 1.5 1.3 2.6
Other production costs ..... 5.7 5.8 6.8

Travel/trade shows ........ 1.2 1.2 1.0
Insurance . . . . . . 1.1 0.6 4.1
Telephone . . . . . . 1.4 1.3 1.2
Electricity . . . . . . 0.8 0.8 1.5
Taxes/licenses/bonds ....... 1.1 1.1 1.5
Advertising . . . . .. . 1.4 1.5 1.5
Rent: land and/or buildings .... 1.4 1.6 2.4
Other cash expenses ........ 9.4 11.0 2.8
Administrative & overhead .... 17.7 19.1 16.0
TOTAL CASH COSTS . . .. 14. 140.5 141.1

Non-Cash Costs
Depreciation: mach & equip. ..... 3.0 2.6 7.4
Depreciation: bldgs, fences, wells. 3.4 2.6 16.7
Inventory decrease In supplies. .. 0.0 0.0 1.1
Interest on capital, 12% ..... 19.2 16.6 27.8
NON-CASH COSTS . . . 25 21.8 52.9

TOTAL ALL COSTS ........ 160.1 162.3 194.0








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 1D, "Propagating and finishing bed and bench
space."
SSalary and Wages
Salaries and wages (includes operator) per square foot amounted to 56.6
cents in the 21 nurseries. For the seven largest ones, they averaged 56.2
cents, or about the average. The smallest nurseries had 92.5 cents, or 36 cents
more than the average.
-Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 63.4 cents per square foot. For the largest nurseries, they
-were 68.4 cents, or five cents above the average. The smallest ones had 48.8
cents, or almost.15 cents below the average, again due to lower expenditures for
plants, seeds and packing supplies.
Other Production Costs
S Other production costs ("facility repairs" and "equipment operation") aver-
aged 6.1 cents. For the largest nurseries, they were 6.3 cents. The six
smallest nurseries had 8.1 cents, or two cents above the average.
Administrative and Overhead
These costs ("travel" through "other cash expenses") averaged 19.1 cents.
For the largest nurseries, they were 20.5 cents, or 1.4 cents higher. The six
smallest nurseries had 19.2 cents, or about the average.
Total Cash Costs
Total cash costs in the 21 nurseries averaged 145.3 cents ($1.45) per square
foot of propagating and finishing space. For the seven largest nurseries, they
were 151.4 cents ($1.51), up by six cents. The six smallest nurseries had 168.6
cents ($1.69), or 23 cents above average.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged 27.6
cents for the 21 nurseries. The largest nurseries had 23.5 cents. Smallest




19


nurseries had 63.2 cents, or more than double the average.
Total All Costs
Total costs per square foot of propagating and finishing space averaged
173.0 cents ($1.73). For the largest nurseries, they were 174.9 ($1.75), or two
cents higher. The smallest ones had 231.8 cents ($2.32), or almost 59 cents
above the average.

Table 9.--Costs per square foot of propagating and finishing space, 21 Wholesale
nurseries in Dade County, Florida, 1986.


Item


Average
all 21


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

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 .. ...
Production supplies . . . .

Facility repairs/maintenance . .
Equipment operating costs . . .
Other production costs . . .

Travel/trade shows . . . .
Insurance . . . . . . .
Telephone . . . . . . .
Electricity . . . . . .
Taxes/licenses/bonds . . . .
Advertising . . . . . .
Rent: land and/or buildings . .
Other cash expenses . . . .
Administrative & overhead . .
TOTAL CASH COSTS . . . .


Non-Cash Costs
Depreciation: mach/equipment .
Depreciation: bldgs/fences/wells
Inventory decrease in supplies.
Interest on capital, 12% . .
NON-CASH COSTS . . . .


TOTAL ALL COSTS . . . .


9.5
47.1
56.6

30.8
7.7
1.2
6.0
3.9
3.6
5.1
5.2
63.4

4.5
1.6
6.1

1.3
1.2
1.5
0.9
1.2
1.6
1.5
10.1
19.1
145.3


3.2


3.6
0.0
20.8
27.6

173.0


Average Average Your
7 largest 6 smallest nursery
- - Cents - - - - -


7.5
48.7
56.2

43.2
8.0
1.4
5.8
4.0
3.7
5.9
5.5


4.9
1.4
6.3

1.2
0.7
1.4
0.8
1.2
1.7
1.7
11.8
20.5
151.4


2.8
2.8
0.0
17.9
23.5

174.9


37.1
55.4
92.5

10.8
10.3
1.2
8.5
4.7
4.1
2.2
7.0
48.8

5.0
3.2
-8.1

1.2
4.9
1.5
1.8
1.8
1.8
2.9
3.3
19.2
168.6


8.9
19.9
1.3
33.2
63.2

231.8


I~P~-I lllll'= PInInI P = == inI


*


--








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 indicate 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
i'plant inventory value."
Salaries and Wages
Salaries and Wages (includes operator) averaged 32.7 cents per dollar of
sales after adjusting for changes in inventory. For the seven largest
nurseries, they were 32.2 cents, about the same as the average. The smallest
nurseries had 53.2 cents, more than 20 cents above the average.
,Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 36.6 cents. For the seven largest nurseries, they were 39.2
-cents, or almost two and a half cents above the average. The smallest nurseries
had eight and a half cents below the average, or 28.1 cents, continuing the
effect of smaller expenditures for plants, seeds and packing supplies.
.Other Production Supplies
Other production costs ("facility repairs" and "equipment operation)" aver-
aged 3.5 cents per dollar of adjusted sales. For the largest nurseries, they
were 0.1 cent more, or 3.6 cents. The smallest had 4.7 cents.
Administrative and Overhead
These costs ("travel" through "other cash expense") amounted to 11.0 cents
per dollar of adjusted sales. For the seven largest nurseries, they were up a
little, 11.8 cents. The smallest nurseries had 11.0 cents, or average.
Total Cash Costs
Total cash costs per dollar of adjusted sales averaged 83.9 cents. For the
largest nurseries, they were three cents more, or 86.8 cents. The smallest nur-
series had 97.0 cents, 13.1 cents above the average.
.Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged 15.9
cents. Largest nurseries had 13.5 cents, or 2.4 cents below average. The








smallest nurseries had much higher costs, 36.4 cents, 20.5 cents over average.
Total All Costs
Total costs per dollar of adjusted sales averaged 99.8 cents. For the
Largest nurseries had 100.3 cents. Smallest ones had 133.3 cents, or a deficit
of over 33 cents per dollar of sales adjusted for plant inventory change.

Table 10.--Costs per dollar of sales adjusted for change in plant inventory, 21
foliage plant nurseries in Dade County, Florida, 1986.


Item


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

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 . . .
Production supplies . . . .

Facility repairs/maintenance . .
Equipment operating costs . . .
S Other production costs ...

Travel/trade shows . . . .
Insurance . . . . . . .
Telephone . . . . . . .
Electricity . . . . . .
Taxes/licenses/bonds . . . .
Advertising . . . . .
Rent: land and/or buildings . .
Other cash expenses . . . .
Administrative & overhead . .
TOTAL CASH COSTS . . . .

Non-Cash Costs
Depreciation: mach/equipment .
Depreciation: bldgs/fences/wells
Inventory decrease in supplies. ..
Interest on capital, 12% . ..
NON-CASH COSTS . . . .

TOTAL ALL COSTS . . . .


Average
all 21


5.5
27.2
32.7


17.8
4.4
0.7
3.4
2.2
2.3
2.9
3.0
36.6

2.6
0.9
3.5

0.7
0.7
0.8
0.5
0.7
0.9
0.9
5.8
11.0
83.9


1.8
2.1
0.0
12.0
15.9

99.8


Average Average
7 largest 6 smallest
- - Cents - - -

4.3 21.3
27.9 31.9
32.2 53.2


19.6
4.6
0.8
3.3
2.3
2.1
3.4
3.2
39.2

2.8
0.8
3.6

0.7
0.4
0.8
0.5
0.7
1.0
1.0
6.8
11.8



1.6
1.6
0.0
10.3
13.5

100.3


=~- ~ ~~ I~PP IIP ~ lnI~'=


6.2
5.9
0.7
4.9
2.7
2.4
1.3
4.0
28.1

2.8
1.8
_4.7

0.7
2.8
0.8
1.0
1.0
1.0
1.6
1.9
11.0
97.0


5.1
11.5
0.7
19.1
133.3
133.3


Your
nursery










Costs Per Dollar of Sales (Table 11)


While total business position is indicated by costs per dollar of sales
adjusted 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 35.4 cents per dollar of
cash received. For the seven largest nurseries, they were 33.5 cents, or two
cent less than the average. The smallest nurseries had 72.3 cents, or double
the average.
Production Supplies
Production supplies ("plants and seeds" through "other production sup-
(plies") averaged 39.7 cents per dollar of cash sales. For the seven largest
*nurseries, they were 40.8 cents, or one cent greater than average. The smallest
nurseries had 38.2 cents, more than a cent below the average.
Other Production Costs
Other production costs ("facility repairs" and "equipment operation)" aver-
aged 3.8 cents per dollar of cash received. For the seven largest nurseries,
they were 3.7 cents. Smallest ones had 6.3 cents, or 2.5 cents above average.
Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 12.0 cents per
dollar of sales. For the seven largest nurseries, they were 12.2 cents. The
smallest nurseries had 15.0 cents, or three cents above average.
Total Cash Costs
Total cash costs averaged 90.9 cents per dollar of cash received for all 21
nurseries. This means that they were able to meet current bills with slightly
more than nine cents to spare per dollar of sales. For the largest nurseries,
they were 90.2 cents, or 0.7 cents lower than average. The smallest ones had
131.8 cents, about 41 cents over the average.
Non-Cash Costs
These costs ("depreciation" through "interest on capital") averaged 17.3
cents per dollar of sales. For the seven largest nurseries, they were 14.0
cents. The six smallest nurseries had much higher non-cash costs, 49.3 cents







per dollar of sales.
Total All Costs
Total all costs averaged 108.2 cents per dollar of cash sales. Largest
nurseries averaged 104.2 cents and smallest nurseries 181.3 cents. Hence, none
of the groups took in enough cash to cover all the non-cash costs for the year.

Table 11.--Costs per dollar of sales (no adjustment for change in plant inven-
tory), 21 foliage plant nurseries in Dade County, Florida, 1986.

Item Average Average Average Your
all 21 7 largest 6 smallest nursery
- - - - Cents - - - - -


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

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

Facility repairs/maintenance
Equipment operating costs .
Other production costs .

Travel/trade shows . . .
Insurance . . . . .
Telephone . . . . .
Electricity . . . . .
Taxes/licenses/bonds . .
Advertising . . . . .
Rent: land and/or buildings .
Other cash expenses . . .
Administrative & overhead .
TOTAL CASH COSTS . .


5.9
29.5
35.

19.3
4.8
0.8
3.7
2.4
2.2
3.2
3.2
39.7

2.8
1.0
3.8

0.8
0.7
0.9
0.6
0.8
1.0
0.9
6.3
12.0
90.9


Non-Cash Costs
Depreciation: mach/equipment . 2.0
Depreciation: bldgs/fences/wells 2.3
Inventory decrease in supplies. .. 0.0
Interest on capital, 12% ... . 13.0
NON-CASH COSTS . . ... .17.3

TOTAL ALL COSTS . . ... 108.2


4.5
29.0
33.5

20.4
4.8
0.8
3.4
2.4
2.2
3.5
3.3
4078

2.9
0.8
3.7

0.7
0.4
0.9
0.5
0.7
1.0
1.0
7.0
12.2
90.2


1.6
1.7
0.0
10.7
14.0

104.2


29.0
43.4
72.3

8.4
8.0
1.0
6.6
3.7
3.2
1.7
5.5
38.2

3.9
2.5
6.3

0.9
3.8
1.1
1.4
1.4
1.4
2.2
2.6
15.0
131 .8


6.9
15.6
1.0
25.9


181.3


-----------'rP= =t1e3P Pe----- ---


r~l~==x==











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
invested in the operation. After all is said and done, it is for a payment on
his time that a nursery operator works, and it is for a return to capital that
nursery operators and lending institutions invest funds in nursery operations.
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. Included could be rent income, interest income, delivery
income, boxing charges, and income from the sale of fertilizer and supplies.
Total gain for the 21 nurseries averaged $1,228,434. Largest nurseries
averaged more than double that amount, or $2,968,196. Smallest nurseries had
ten percent of the average, or $119,251.
Net Nursery Income
Net nursery income is the total return for the year for the time and man-
agerial 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 allowances 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 (including borrowed funds) supplied by the owner-operator.
For the 21 nurseries, it averaged $223,067. For the seven largest
nurseries, it was $439,175, or almost twice the average. Smallest nurseries
had $8,586, or four percent of the average.
Return to Capital
From net nursery income is subtracted the salary or time value of the owner-
operator (from Table 6) 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 alternatives.
Return to capital for the 21 nurseries amounted to $156,203, or a return of
12.79 percent. For the seven largest nurseries, it was $311,740 for 12.34
percent or about average. The smallest nurseries averaged a loss of $16,802 for
a -8.88 percent return on the capital invested. In other words, the operator
did not earn anything on investment and did not realize fully the salary or time
value shown here.


Table 12.--Income summary, 21 wholesale foliage plant nurseries in Dade County,
Florida, 1986.
ILII --~OOI II PI1P -III = = =r-r-l


Item


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


Unit Average
all 21

$ 1,126,923
$ 94,140
$ 2,183
$ 5,188
$ 1,228,434


Average Average
7 largest 6 smallest
- Dollars - -
2,841,187 87,594
109,360 31,477
4,534 0
13,115 180
2,968,196 119,251


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) -


( 957,284)
( 48,083)
(1,005,367)

223,067
( 66,864)


156,203
12.79


(2,434,846)
( 94,175)
(2,529,021)

439,175
( 127,435)


311,740 (
12.34 (


( 90,085)
( 20 580)
( 110,665)

8,586
( 25,389)


( )
( )
( )


( )


16,802)
8.88)


(f) Total gain--the sum of plant sales, change in plant and supply inventor
ies, 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 sub
-tracting 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








Balance Sheet (Table 13)


This section is a relatively new addition to the Florida Nursery Business
Analysis series. It was made possible by the additional fiscal information
supplied by the participants in the program. These balance sheet figures
represent the mid-year financial situation of the firms. They were derived as
an average of year-beginning and year-end figures.
Current Assets
Current assets consist of cash, accounts receivable, and inventory values.
They are cash, or items deemed convertible to cash within a year's time. Cash
on hand includes funds in checking accounts, savings accounts, and money market
funds. Average cash on hand was $39,483. Largest nurseries had more than twice
this amount ($91,349). Smallest ones had 39 percent of the average ($15,466).
Accounts receivable are the uncollected funds due. Most of this is payments due
.for plants sold. Generally, this figure should be minimized. Uncollected funds
Spay no bills and earn no interest. They averaged $164,841. Largest nurseries
ihad over twice this amount, or $444,880. The smallest nurseries had $4,408, or
.,about three percent of the average. Inventory values are the investments in
-growing plants and supplies presented previously in Table 1. They averaged
.$457,355. Largest nurseries averaged 74 percent more ($795,962). Smallest had
.18 percent of the average ($83,176). Total current assets averaged $691,679.
SFor largest nurseries, they were $1,332,191, or almost twice the average.
Smallest averaged $103,050, or one 15 percent of the average.
Long Term Assets
Long term assets are investments in buildings, machinery and land that
normally would not be converted to cash within a year. Current values of
investments are the original cost less accumulated depreciation. Comparing
original cost with the value remaining after subtracting accumulated deprecia-
tion provides an idea of the degree to which capital assets have been depleted.
Original investments averaged $769,321. Subtracting accumulated depreciation of
$239,849 leaves a current value of $529,471 (68.8 percent of original cost).
Largest nursery original cost was $1,610,287. Subtracting accumulated deprecia-
*tion of $415,790 gives a remaining value of $1,194,497 (74.2 percent of original
cost). Smallest nursery original investment was about a fifth of the average,
or $168,415. Subtracting accumulated depreciation of $82,152 makes the current
value $86,263 (51.2 percent of the original cost).








Total Assets
Total assets averaged $1,221,150. Largest nurseries had twice this amount
($2,526,688). Smallest nurseries had 16 percent of the average ($189,313).
Liabilities
Liabilities may be "current" (payable during the current year) or "long
term" (payable at some time after the current year). Current liabilities
averaged $66,308. Largest nurseries had 2.7 times this amount ($177,335).
Smallest ones had five percent of average ($3,399). Long term liabilities may
be notes or mortgages. They averaged $376,668. Largest nurseries had 1.6 times
this amount ($619,018). Smallest ones had 36 percent of the industry average
($136,444). Total Liabilities represent that part of the nursery that belongs
to someone else. They averaged $442,976, or 36 percent of the assets. Largest

Table 13.--Balance Sheet, 21 wholesale foliage plant nurseries in Dade County,
Florida, 1986

SItem Average Average Average Your
all 21 7 largest 6 smallest nursery
- - - - Dollars - - - - -
Assets
Current Assets
Cash on hand ....... 39,483 91,349 15,466
Accounts receivable. ...... 164,841 444,880 4,408
Inventories: Plants ...... 447,600 783,124 77,403
Supplies .. 9755 12,838 5,772
s Total Current Assets ...... 691,679 1,332,191 103,050

Long Term Assets
Machinery & equipment ...... 181,456 382,961 43,672
Buildings & fixtures ...... 442,197 979,113 101,826
Land .............. 145,668 248,212 22,917
Sub-total (original cost).. 769,321 1,610,287 168,415
Less accumulated depreciation. ( 239,849)( 415 790)( 82,152)()
Total Long Term Assets ..... 529,471 1,194,497 86,263

Total Assets. .......... 1,221,150 2,526,688 189,313

Liabilities and Net Worth
Liabilities
Current liabilities. ...... 66,308 117,335 3,399
Long-term liabilities ...... 376,668 619,018 136,444
Total liabilities ........ 442,916 796,353 139,843

Net Worth ............ 778,175 1,730,335 49,470

Total Liabilities & Net Worth . 1,221,150 2,526,688 189,313
e'tD==P=I===== =----------------------------====------







nurseries had 1.8 times this amount, or $796,353 (32 percent of the assets).
Smallest ones had 32 percent of the industry average, or $139,843 (74 percent of
the assets).
Net worth
Net worth is the difference between "total assets" and "total liabili-
ties". This is what the owner owns. The average net worth of all 21 nurseries
was $778,175 (64 percent of the assets). Largest nurseries had $1,730,335 (68
percent). Smallest nurseries averaged $49,470 (26 percent of the assets).


Total Profitability Model (Figure 1)


The Total Profitability Model (Figure 1) combines operating statement and
balance sheet figures in three sections: margin management, asset management and
leverage management. Together, they indicate the firm's return on net worth.
Margin Management
Figures for this section come from Table 12. From nursery total gain
S($1,228,434) are subtracted total deductions ($1,005,367) plus operator's salary
($66,864) to give return to capital ($156,203). This divided by total gain
($1,228,434) yields an average net profit margin of 12.72 percent. Largest nur-
series averaged a net profit margin of 10.50 percent. Smallest nurseries aver-
aged a loss of 14.09 percent.
SAsset Management
Figures for this section come from the asset portion of Table 13. Current
assets ($691,679) plus long term assets ($529,471) make total assets of
$1,221,150. Total gain ($1,228,434) divided by total assets ($1,221,150) gives
an asset turnover figure of 1.0060. Asset turnover times net profit margin
(12.72 percent) results in an average return to capital of 12.79 percent.
Largest nurseries averaged 12.34 percent return to capital. Smallest ones
averaged -8.88.
Leverage Management
Figures for this section come from the liabilities and net worth portion of
Table 13. Current liabilities ($66,308) plus long term liabilities ($376,668)
gives average total liabilities of $442,976. This subtracted from total assets
($1,221,150) yields average net worth of $778,175. Total liabilities and net
worth divided by net worth gives a leverage factor of 1.5692. Leverage times
return to capital (12.79 percent) gives a return on net worth of 20.07 percent.
Largest nurseries had 18.02 percent. Smallest nurseries averaged -33.96 percent.










MARGIN MANAGEMENT


NET PROFIT
MARGIN


RATE OF
RETURN TO
CAPITAL


RETURN ON


LEVERAGE MANAGEMENT


TOTAL LIABILITIES


Figure 1.--Total profitability model, 21 wholesale foliage plant nurseries in
Dade County, Florida, 1986








Factors Associated With Level of Profit (Table 14)


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
appeared before. But here, the average for all 21 nurseries is compared with
the average for the seven most profitable and the seven least profitable of the
nurseries 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 21 nurseries was $223,067. The most profitable
third of the nurseries averaged 2.6 times this amount, or $574,474. The least
profitable third averaged a loss of $944. The following compares the average
'.for these three groupings of foliage nurseries using one indicator from selected
tables as noted.
Size of Business
The indicator of size of business selected from Table 1 was "Value of own
plants sold." The 21 nurseries averaged $1,126,923. The most profitable third
had $2,456,350 in sales, or 2.2 times more. The least profitable group averaged
$526,130, or about 47 percent of the average. This does not mean that small
businesses cannot be profitable, but it does indicate that larger profits tend
to be associated with higher dollar volumes of business.
Production Rate
The indicator for 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 21 nurseries was $1.48 per square foot. The most
profitable third had four cents more, or $1.52, and the least profitable third
had $1.44, or four cents less than the average.
These figures show that higher sales per square foot of bed and bench space
in a nursery usually accompany higher profits. Lower sales per square foot may
indicate 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, different marketing pro
grams can alter the returns received for the same crop.
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." Average for all 21
nurseries was $41,650 per person. Sales were 17 percent higher than average at

Table 14.--Factors associated with level of profit, 21 wholesale foliage plant
nurseries in Dade County, Florida, 1986.

Item Unit Average Average 7 Average 7 Your
all 21 most profit least profit nursery
Level of profit
" Net nursery income (Table 12) $ 223,067 574,474 ( 944)
Factors associated with level of profit
Size of business (Table 1)
Value of own plants sold - $ 1,126,923 2,456,350 526,130

Production rate (Table 2)
Sales/sq ft of total
bed and bench space - - $ 1.48 1.52 1.44

Labor efficiency (Table 3)
Own plant sales/employee - $ 41,650 48,849 33,728

Space use intensity (Table 4)
Annual turnover of plant
inventory value - - - % 236 380 138

Use of capital (Table 5)
Annual turnover of owned
capital value - - - - % 92 110 66

Level of costs (Table 8)
Cost/sq ft of total bed space- $ 1.60 1.52 1.87

Cost efficiency (Table 10)
Cost/$ sales adjusted for
change in inventory value - $ 1.00 0.94 1.26

P-P-=PllI--I-=P-- e=-------------








$48,849 for the most profitable third, and around 81 percent of the average at
$33,728 for the least profitable third of the nurseries. Higher sales per
employee viewed alone at this point in time might seem to indicate true effi-
ciency. 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 indicators such as production rate, space use intensity, capi-
tal 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 larger 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
S The indicator of intensity in the use of space selected from Table 4 was
,"Annual turnover of plant inventory value." Generally speaking, larger per-
centage turnover numbers are desirable, because they indicate that the value of
money tied up in inventory is being revolved faster. Average turnover was 236
percent, meaning that the value of own plants sold was 2.36 times the average
investment in plant inventory. For the most profitable third, it was 380 per-
cent. For the least profitable third, it was 138 percent.
Reduced intensity of space use may be the result of things that increase the
amount of money invested in inventory (including 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 for rapidly refilling empty space, selecting
varieties that grow slowly relative to the price they receive, inadequate
fertilization 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
reduce sales volume for a given nursery as mentioned earlier. Either over or
under valuing inventory can also change the intensity of use figure. However,







variations in the indicator for this reason are ficticious, 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
general, larger percentage turnover numbers are desirable, for they indicate
greater sales per dollar of investment in the nursery.
Annual turnover of owned capital averaged 92.2 percent, meaning that the
value of own plants sold during the year amounted to 92.2 percent of the capital
invested. For the most profitable third, it was 110.3 percent. The rate for
the least profitable third was considerably lower than the average at 66.4
percent.
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 capital 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
comparing costs between nurseries. Other things being equal, a lower cost per
square foot is desirable.
Costs for total bed and bench space averaged $1.60, or 12 cents more than
sales per square foot ($1.48) before adjusting for changes in plant inventory
value. For the most profitable third, costs were $1.52 per square foot or four
cents greater than the average and the same as their sales per square foot
($1.52). The least profitable third averaged $1.87 cents, which was 43 cents
per square foot more than sales ($1.44).
Problems that cause costs per square foot to increase include inefficient
planning and utilization of labor, insufficient investment in labor saving cap-
ital items, destruction or theft of supplies and plants, not checking for best
price before purchasing needs, and not carefully managing the nursery opera-
tion. 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 a premium market.









Cost Efficiency
The indicator of cost efficiency selected was "Cost per dollar of sales
adjusted for change in plant inventory" from Table 10. This shows how well the
"nursery did in total, the result of cash sales plus change in inventory values.
In general, lower costs per dollar of sales are desirable.
The average cost per dollar of sales adjusted for change in inventory for
the 21 nurseries was about $1.00. The similar figures for the most profitable
and least profitable third of nurseries was 94 cents and $1.26, respectively.
Thus, the least profitable third of nurseries had a deficit in meeting all costs
of 26 cents per dollar of sales adjusted for change in plant inventory.
Growth in Sales
Growth in sales of a business can, of course, be due in part to inflation-
ary price increases. It can also be the result of all the things already men-
tioned 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 needs to be planned and orderly so that
it contributes to the profitability of an operation. By way of contrast, too
-rapid of an expansion program can result in excessive increases in costs and
strong needs for cash before the new plants have reached salable size. The
growth, though desirable in an economic sense, needs to be carefully planned and
executed.


Range of Figures (Table 15)


In this section, the average for all 21 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
provide the range of high-low figures shown. In the previous section, figures
for all factors were for the same groups of high profit and low profit nurser-
ies. This section shows the average for the best three and worst three numbers
regardless of the nursery or profit level to which they belong.
As can be seen in Table 15, 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 discus-








sion of things that contribute to variations in the figures in the previous
section would also apply here.


Seasonality of Sales (Figure 2)


Figure 2 compares monthly sales for the 21 nurseries with the annual average
monthly cash costs and the annual average monthly total costs. In general,
sales were good during January, dropped in February almost to the point where
they couldn't cover cash costs, rose above the average total cost line for March
and April, then dropped to the point where in August, they wouldn't even cover
all cash costs. Sales hovered around the average total cost line for September
through November, then rose to a peak for the year in December.

Table 15.--Range of figures on factors associated with level of profit,
wholesale foliage plant nurseries in Dade County, Florida, 1986

Average 3 best 3 worst
Item Unit all 21 factor factor Your
nurseries average average nursery
Level of profit
Net nursery income (Table 12) $ 223,067 1,061,792 ( 77,725)
Factors associated with level of profit
Size of business (Table 1)
Value of own plants sold - $ 1,126,923 5,850,209 48,686

Production rate (Table 2)
Sales/sq ft of total
bed and bench space - - $ 1.48 4.74 0.61

Labor efficiency (Table 3)
Own plant sale/employee- - $ 41,650 63,667 14,555

Space use intensity (Table 4)
Annual turnover of plant
inventory value - - - % 236 857 51

Use of capital (Table 5)
Annual turnover of owned cap-
ital value - - ----- % 92 145 32

Level of costs (Table 8)
Cost/sq ft of total bed space- $ 1.60 0.85 8.04

Cost efficiency (Table 10)
Cost/$ sales adjusted for
change in inventory value - $ 1.00 0.77 1.62









125


120-


115 -


110 1
h- AVERAGE MONTHLY SALES

105-








90
ANNUAL AVERAGE MONTHLY TOTACASH COSTSCOSTS

90



a I I I I I I I I I I
ANNUAL AVERAGE MONTHLY CASH COSTS



Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

MONTH
Figure 2.--Seasonality of sales, 21 wholesale foliage plant nurseries in Dade County, Florida, 1986












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 using the formulas shown and write the results on the lines
provided for this purpose on each table. Another alternative is to acquire the
University of Florida microcomputer program, FOLAGNBA.BAS, for making these
calculations. Either alternative should provide some valuable insight into the
business side of operating a foliage nursery. It should improve management
decisions concerning things that affect the profitability of the nursery
operation.
Nursery operators who find this kind of information to be useful, but have
difficulty finding the time or energy to engage in the tedium of doing their own
calculation may wish to consider becoming a participant in the FLORIDA NURSERY
BUSINESS ANALYSIS PROGRAM. If you would like to do so, contact the ornamental
agent in your nearby county Extension office, or contact the authors in
Gainesville. Nursery operators who authorize a commercial accounting firm to
supply the data required for the program can participate with a minimum of
effort on their part.




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