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 Front Cover
 Title Page
 Abstract
 Acknowledgement
 Table of Contents
 List of Figures
 List of Tables
 Introduction
 Procedure
 Data and results
 Concluding comments
 Appendix














Business analysis of field nurseries in Florida
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Permanent Link: http://ufdc.ufl.edu/UF00026323/00004
 Material Information
Title: Business analysis of field nurseries in Florida
Series Title: Economic information report
Portion of title: Field nurseries in Florida
Physical Description: v. : ; 28 cm.
Language: English
Creator: Perkins, George R
Almeter, Carolyn A
Dasse, Frank A ( Frank Arthur ), 1933-
Gunter, Dan L
University of Florida -- Food and Resource Economics Dept
Publisher: Food and Resource Economics Dept., Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Creation Date: 1985
Publication Date: 1975-
Frequency: annual
regular
 Subjects
Subjects / Keywords: Nurseries (Horticulture) -- Economic aspects -- Periodicals -- Florida   ( lcsh )
Ornamental plant industry -- Economic aspects -- Periodicals -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
statistics   ( marcgt )
serial   ( sobekcm )
 Notes
Dates or Sequential Designation: 1973-
General Note: Title from cover.
 Record Information
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: aleph - 000408265
oclc - 08145302
notis - ACF4733
System ID: UF00026323:00004

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Page i
    Abstract
        Page ii
    Acknowledgement
        Page ii
    Table of Contents
        Page iii
        Page iv
    List of Figures
        Page v
    List of Tables
        Page vi
    Introduction
        Page 1
    Procedure
        Page 2
    Data and results
        Page 3
        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
    Concluding comments
        Page 28
    Appendix
        Page 29
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
Full Text


J. Robert Strain
Alan W. Hodges


Business Analysis of Field
Nurseries in Florida, 1985,
1986,1987


-- ;" r "r...


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


Economic Information
Report 249


October 1988















J. Robert Strain
Alan W. od es.


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ABSTRACT
Sales, costs, returns, and efficiency indicators are presented for three samples of
wholesale woody ornamental field nurseries in Florida, one sample each for the tax years of
1985, 1986, and 1987. Indicators of business performance generally rated higher for the 1987
sample than for 1985, with average returns on capital investment of 20.3 percent in 1987
compared to 11.6 percent in 1985. For the most recent year (1987), capital investment
including plant inventory, land, equipment, buildings, supplies, and accounts receivable
amounted to $1.593 million. Plant sales averaged $660,000, and growth in the value of plant
inventory during the year was $45,007. Total costs of production, including cash expenses and
non-cash allowances for depreciation averaged $349,946. When adjustments were made for
changes in inventories and miscellaneous income, net nursery income averaged $360,874.
Average returns (to owner-operator and capital) per acre in production were $3,890.
Comparable information is presented also for the 1985 and 1986 sample averages.
KEY WORDS: Woody ornamental field nursery business analysis, income, costs,
investment, efficiency measures, Florida.


ACKNOWLEDGEMENTS
This report was made possible by the cooperating woody ornamental field nursery
operators who made available their production and accounting records on a confidential basis
for analysis and averaging. In addition, assistance and encouragement were supplied by
Extension Ornamental Horticultural Agents Bill Schall, Terry DelValle, Larry Halsey, Loretta
Hodyss, DeArmand Hull, Linda Landrum, Peter Mitchell, Cathy Neal, Roger Newton, Bill
Phillips, and Uday Yadav. Acknowledgement and appreciation 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.









ABSTRACT
Sales, costs, returns, and efficiency indicators are presented for three samples of
wholesale woody ornamental field nurseries in Florida, one sample each for the tax years of
1985, 1986, and 1987. Indicators of business performance generally rated higher for the 1987
sample than for 1985, with average returns on capital investment of 20.3 percent in 1987
compared to 11.6 percent in 1985. For the most recent year (1987), capital investment
including plant inventory, land, equipment, buildings, supplies, and accounts receivable
amounted to $1.593 million. Plant sales averaged $660,000, and growth in the value of plant
inventory during the year was $45,007. Total costs of production, including cash expenses and
non-cash allowances for depreciation averaged $349,946. When adjustments were made for
changes in inventories and miscellaneous income, net nursery income averaged $360,874.
Average returns (to owner-operator and capital) per acre in production were $3,890.
Comparable information is presented also for the 1985 and 1986 sample averages.
KEY WORDS: Woody ornamental field nursery business analysis, income, costs,
investment, efficiency measures, Florida.


ACKNOWLEDGEMENTS
This report was made possible by the cooperating woody ornamental field nursery
operators who made available their production and accounting records on a confidential basis
for analysis and averaging. In addition, assistance and encouragement were supplied by
Extension Ornamental Horticultural Agents Bill Schall, Terry DelValle, Larry Halsey, Loretta
Hodyss, DeArmand Hull, Linda Landrum, Peter Mitchell, Cathy Neal, Roger Newton, Bill
Phillips, and Uday Yadav. Acknowledgement and appreciation 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

Page
ABSTRACT . . . . . . . . . ii
ACKNOWLEDGEMENTS .............................. .. ... ii
LIST OF FIGURES ..... .... .... ....... ............ v
LIST OF TABLES ... ... .. .... .. ...... ... ... ..... vi
LIST OF APPENDIX TABLES ........................... ... vi
INTRODUCTION .................................. 1
PROCEDURE . . . ... . .. .. . . .. 2
DATA AND RESULTS .................... ............... 3
Size of Business . . . . . . . . 3
Sales and total value of production . . . . . 3
Annual sales . . . . . . .. 3
M monthly sales . . . . . . . 5
Land, labor and capital ............ ....... ...... 5
G rowing area .. . .. . . . . 5
People . . . . . . . .. 5
Capital owned and managed . . . . . 6
Productivity Indicators . . . . . . . 7
Land use .... .. . . . .......... 7
Labor use . . . . . . . . 8
Capital use .. . .. .. . .... .. .. ... 9
Capital turnover .. . . . .. ... . .. 9
Capital managed per person . . . . . 9
Capital managed per acre ........................ 10
Distribution of managed capital . . . . .. 11
Costs of Production . . . .. . . .. 12
Costs by expense category* .... ............... ........ 12
Percent of total costs by expense category* . . . .. 14
Cost Efficiency ..... ....... ......... ............ 16
Costs per acre of growing area ............ ...... ...... 16
Costs per dollar's worth of Production . . . .. 18
Cash Costs per dollar's worth of sales . . . . .. 18
Income Summary . . . .... .. . . .. 20
Total gain . . .. .. ... . . . 20
Cost deductions and net nursery income. . . . . 20
Return on Capital ..................... .. ......... 22
Statement of financial position . . . . . . 23
Current Assets . . . . . ...... 23
Cash on hand ... .... ..... ................. 23
Accounts receivable ........... ............ ... 23
Inventory values . .. . . . . 23
Total current assets .. ... . .. . .... 23
Long term assets .............. .. ............ 23
Total assets . . . . ..... . ... 24
----------------------------------------------------------------------
These sections also contain the following subcategories:
Salaries and Wages
Production Supplies Total Cash Costs
Other Production Costs Non-Cash Costs
Administrative and Overhead Total All Costs










TABLE OF CONTENTS (Continued)
Page

Liabilities . . . . . . . . .. 24
Current liabilities . .. .. .. . .... .. 24
Long term liabilities . .. .. ... .. . .... 24
Total liabilities . . . . .. .... 24
Net Worth . . .. . .. .. . ... 24
Total Profitability Model .................. ....... 26
Margin management .. ............... ..... ..... .. 26
Asset management .. . . . .. . . .. 26
Leverage management ............. ... ............ 26
Growth in the business . . . . . . ... 26
CONCLUDING COMMENTS ............... ........... 28
APPENDIX . . . . . . . . . 29












LIST OF FIGURES


Figure


1 Sales/sales adjusted for inventory change


2 Monthly sales ..............


3 Land: growing area ............


4 Labor: number of employees .......


5 Capital owned and managed .......


6 Land use: Value of production per acre .


7 Labor use: Value of production per person


8 Capital turnover .............


9 Capital managed per person ........


10 Capital managed per acre .........


11 Distribution of managed capital . .


12 Distribution of costs of production .


13 Costs per acre of growing area ......


14 Costs per dollar's worth of production ..


15 Cash costs per dollar of sales . .


16 Distribution of total gain .........


17 Return to capital .............


18 Assets and liabilities ...........


19 Total profitability model, three samples
1986, 1987.............


of field nurseries in Florida, 1985,
. . . . . . 27


Pane


S. . . 4


. . . . . 5


. . . . . 6


. . . . . 6


. . . . . . 6


. . . . . 7


. . . . . 8


. . . . . 10


. . . . . 10


. . . . . 10


. . . . . 11


. . . . . 15


. . . . . 17


. . . . . 19


. . . . . 19


. . . . . 2 1


. . . . . 22


. . . . . 25
25









LIST OF TABLES
Table

1 Sales, acres, people and capital, three samples of field nurseries in Florida,
1985, 1986, and 1987. . . . . . . .

2 Costs of Production, three samples of field nurseries in Florida,
1985, 1986, and 1987... ........................

3 Income Summary, three samples of field nurseries in Florida, 1985, 1986,
and 1987 . . . . . . . .



LIST OF APPENDIX DATA TABLES

Appendix Table

1 Size of business, three samples of field nurseries in Florida,
1985, 1986, and 1987 . . . . . . .


Page


. 4


. 12


. 21


Page


2 Land use indicators, three samples of field nurseries in Florida,
1985, 1986, and 1987 . . . . . . .. 33

3 Labor use indicators, three samples of field nurseries in Florida,
1985, 1986, and 1987 . . . . . ...... 34

4 Capital use indicators, three samples of field nurseries in Florida,
1985, 1986, and 1987 .... .............. ........ 34

5 Costs by expense category, three samples of field nurseries in
Florida, 1985, 1986, and 1987 .. .. . . . .. .. 35

6 Percent of total costs by expense category, three samples of field
nurseries in Florida, 1985, 1986, and 1987 . . . . .. 36

7 Costs per acre, three samples of field nurseries in Florida, 1985, 1986,
and 1987 .... .. ........................ 37

8 Costs in cents per dollar's worth of production, three samples of field
nurseries in Florida, 1985, 1986, and 1987 . . . . .. 38

9 Cost in cents per dollar's worth of sales (no adjustment for change in plant
inventory), three samples of field nurseries in Florida, 1985,
1986, and 1987 ............................. . . 39

10 Income summary, three samples of field nurseries in Florida, 1985,
1986, and 1987 . . . . . . . 40

11 Statement of Financial Position, three samples of field nurseries in
Florida, 1985, 1986, and 1987 .. .. .. . . .. 40




















BUSINESS ANALYSIS OF FIELD NURSERIES IN FLORIDA, 1985, 1986, 1987


J. Robert Strain and Alan Hodges



INTRODUCTION

This publication contains information on sales, costs, returns and production efficiency
for woody ornamental field nurseries in Florida for 1985, 1986, and 1987. Other publications
in this series includes reports on Woody Ornamental container nurseries, South Florida foliage
plant nurseries, Central Florida foliage plant nurseries and flowering plant nurseries. Purposes
of the nursery business analysis series include:
1) Furnishing nursery operators with various physical and economic measures for
evaluating the efficiency of individual nurseries and for making more informed management
decisions;
2) Providing individuals considering entering the wholesale ornamental plant production
business with an estimate of the input requirement and revenue potential;
3) Providing industry investors with representative measures of average business
performance.
4) Providing Florida Extension personnel with business information for conducting
educational programs with nursery operators.


J. ROBERT STRAIN is an extension economist and professor, and ALAN HODGES is an
economic analyst, both in IFAS Food and Resource Economics Department.









PROCEDURE
The information and averages presented in this report are based on data supplied
by nursery operators in the form of confidential production and accounting records.
They participated in the program voluntarily and do not represent a statistically selected
sample. However, the nursery operators participating in the Florida Nursery Business
Analysis Program are thought to represent some of the more efficient woody ornamental field
nurseries in Florida, rather than being typical of the woody ornamental field nursery
industry.
Data were collected for the respective fiscal years 1985, 1986, and 1987. In some cases,
data were received for a fiscal year that did not coincide with the calendar year. Data for
fiscal years ending after July 1 in one year, and before July 1 the next year were included
with the corresponding calendar year data. Numbers of firms providing data each year were as
follows: 1985, 9; 1986, 6; 1987, 9.
Not all nursery operators received a regular salary from their operation. In these
cases, an estimate of the value of the time of the operator was collected 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, and instead, an interest charge for the total owned investment was included as a
non-cash cost, calculated at the rate of 12 percent per year.
The owned capital investment reflects the depreciated book value of buildings,
improvements, machinery and equipment. Growing plants also are included as a part of the
owned capital investment, at a value reflecting their average wholesale price, and discounted
in proportion to the percentage of completion. In this manner, production of plants in
inventory which are not of salable size are accounted for in a fair manner. In the absence of
detailed cost accounting records, a commonly accepted method of evaluating inventory for an
ongoing concern, is to value all plants at 50 percent of their wholesale price. Some nursery
operators use slightly different methods, and for this report, the values received from
operators were the values used. Land included in owned capital investment was valued at
the original purchase price. Although this represents the actual investment in a nursery
operation, it may not reflect the replacement cost, particularly for older firms.
The tables and figures present average values for all nurseries in the sample each year.
On charts where lines appear indicating the range of data, the upper line represents the
average of the highest third of firms in the group for a particular measure, and the lower line
is the average for the lowest third. Nursery operators analyzing their own operations may find
this information especially valuable for indicating the general area of their business needing
additional study and analysis.









Firms participating in the program were located in the Florida counties of Alachua,
Broward, Baker, Collier, Dade, Jefferson, Lake, Lee, Leon, Marion, Orange, Palm Beach, and
Volusia. Nursery operators received an analysis for their own operation, shortly after they
supplied their data, which contained information similar to that shown in this report.


DATA AND RESULTS
The key findings of this report appear in the text in the form of charts and graphs.
The data from which the charts and graphs were derived may be found in the appendix tables
at the end of this report. The appendix tables include notations on calculations involved for
those who may wish to examine some figures in further detail, and spaces are provided for
entering figures pertaining to your own firm for comparison. Where tables appear in this
report, arithmetic inconsistencies from rounding may be noted.
The three samples of nurseries (one for each year) contributing data for this report
differed widely in average size of operations. Since different firms supplied data for each
year, aggregate data such as size of business, and total dollar expenses are not directly
comparable. However, the derived measures for productivity, efficiency, and profitability can
be compared, and should provide useful indicators of average business performance each year
independent of the size of firms involved.


Size of Business (Appendix Table 1)
Size of business data in Appendix Table 1 (summarized in Table 1) presents basic
information on size of business and scale of production operations. When combined with costs
of production in Appendix Table 5, these data provide the basis for developing most of the
measures and indicators shown in the other tables and figures in this report.


Sales and Total Value of Production
Annual sales. Sales figures used in this analysis represent only plants produced by the
nursery firm itself. In other words, if any plants were purchased for immediate resale, or
"brokered", their value was deducted from total sales to give the value of own plants sold.
Figure 1 illustrates the differences in the sizes of the three sample of field nurseries. Own
plant sales averaged $459,480 for the 1985 sample, $224,914 for the 1986 group, and $660,000
for 1987 nurseries (Table 1).
Total value of production for the year is sales adjusted for change in the value of the
plant inventory during the year. Increases in the value of plant inventory during the year
mean the total value of the year's productive activities was greater than sales.









Decreases in the value of plant inventory means the total value of productive effort was less
than sales. For all three samples, plant inventory change was positive, growing by an average
of $79,790, to give a total value of production of $545,787 for the 1985 sample, $332,971 for
the 1986 group, and $705,007 for the 1987 firms (Table 1).



Table 1--Sales, acres, people, and capital, three samples of field nurseries in Florida,
1985, 1986, and 1987.
1985 1986 1987
ITEM unit sample sample sample

Value of own plants sold . . ... 459,480 224,914 660,000
Sales adjusted for plant inventory change. . 86,307 108,057 45,007
Total value of production. . . ... $ 545,787 332,971 705,007
--Total nursery area . . ...... ..acres 30.0 19.8 92.8
Fulltime equivalent persons . .... ..number 11.6 5.9 13.7
Capital owned. . . . ... 1,270,764 670,750 1,592,994
Leased/rented capital items . . ... S 235,000 728,058 569,511
Capital managed. . . . .... 1,505,764 1,398,808 2,162,505

see also Appendix Table 1 for more detail




Figure 1
Sales/Sales Adj. for Inventory Change
Woody Ornamental Field Nurseries

Dollars (Thousands)
800


600 --



24.... i ...
...... ................ it iiiiiii


200 r ... ...... ...


1985 1986 1987








Monthly sales. Figure 2 shows the pattern of monthly sales as a percentage of the
annual total for each of the three years. The sales patterns for the 1985 and 1986 firms were
rather uniform throughout the year, with the peak month's sales less than double the lowest
month. Sales for the 1987 sample, however, had a very sharp peak in January, February, and
December, with these three months accounting for 44 percent of the year's total sales.



Figure 2
Monthly Sales
Woody Ornamental Field Nurseries


Apr May Jun Jul Aug Sep
Month

1985 -- 1986 1987


Land. Labor and Capital
Growing area. Growing area refers to that portion of the total nursery used to grow
plants. Hence, space used for office, parking, roads, ditches, fences, etc. are not included.
Production area averaged 30.0 acres for the 1985 sample, 19.8 acres for 1986 firms, and 92.8
acres for the 1987 group (Table 1 and Figure 3).


People. The number of fulltime equivalent persons employed is obtained by dividing total
labor hours, including the time of salaried non-hourly workers and managers, by the number of
hours in a normal working year (40 hours per week time 52 weeks per year = 2,080 hours).
Average number of persons involved for the 1985 firms was 11.6, for those of 1986 it was 5.9,
and with the 1987 sample it was 13.7 (Table 1 and Figure 4).








Figure 3
Land: Growing Area
Woody Ornamental Field Nurseries
Acres


Figure 4
Labor: Number of Persons
Woody Ornamental Field Nurseries


Capital owned and managed. Capital owned is the current value (original cost less
depreciation taken) of capital assets such as equipment, buildings and land owned in the
nursery operation, plus the value of plants and supplies in inventory, accounts receivable, and
cash on hand. Related debt is not deducted in this determination of the value of capital
owned. Capital owned averaged $1.27 million in 1985, $.67 million in 1986, and $1.59 million in
1987. Capital managed is the value of capital owned plus the value of additional capital items

Figure 5

Capital Owned and Managed
Woody Ornamental Field Nurseries

Dollars (Thousands)
2500


2000
2 0 o0 0 . . . . . . . .. . . . . . . . ... . . . . . . . . . . . . ..:. ..::: ^ ; :i : i ; . . .


1500






SE Capital Owned :::::Capital Managed

0
1985 1986 1987

Capital managed includes leased property








used and under the control of the manager, such as leased property. Capital managed averaged
$1.51 million for the 1985 sample, $1.40 million for the 1986 group, and $2.16 million for the
1987 firms (Table I and Figure 5).



Productivity Indicators
Land Use (Appendix Table 2)
The traditional indicator of efficiency in the use of land is value of production per acre
of growing area. Value of production is annual sales of own plants adjusted for change in the
value of plant inventory during the year. Average rates of production for the three samples
were $18,218 per acre for the 1985 firms, $16,818 per acre for the 1986 group, and $7,599 per
acre for 1987 (Figure 6). The third of firms with the highest annual rates of production
averaged $44,431 per acre, while the lowest third averaged $5,227 per acre.
In general, other things being equal, increasing sales per acre of production area should
increase the profitability of a nursery operation. However, higher sales per acre does not
necessarily assure high profitability. Lower sales per acre of growing area can result from a
number of things, such as 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


Figure 6
Land Use: Value of Production/Acre
Woody Ornamental Field Nurseries


Dollars/Acre (Thousands)
50 i


1985 1986 1987








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.
Plant inventory value per acre in production is another indicator of efficiency in the
use of land. This averaged $35,177 for 1985 nurseries, $23,780 for 1986, and $13,487 for the
1987 group. For ongoing operations, low plant inventory values per acre imply either
inefficient use of land or unwise selection of crops grown in terms of the relationship
between their price and growing area requirements.
Labor Use
Value of production per fulltime equivalent person (2080 hrs per year) is one of the
best measures of efficiency in the use of labor. This averaged $47,150 per person for the
1985 sample, $56,602 for 1986, and $51,312 for 1987 (Figure 7). The highest third of firms on
this measure averaged $148,306, and the lowest third averaged $20,875 per employee.
An indicator of intensity in the use of labor is production area per person. Production
area averaged 2.59 acres per person for the 1985 sample, 3.37 acres for 1986, and 6.75 acres
for 1987. Stated another way, the number of persons per acre averaged .39 for the 1985 group,
.30 for the 1986 sample, and .15 for the 1987 nurseries. Thus, the field nurseries sampled in
1987 employed less than half the number of persons per acre of the 1985 group.



Figure 7

Labor Use: Value of Production/Person
Woody Ornamental Field Nurseries

Dollars/Employee Equivalent (Thousands)
160
1 4 0 ............................ ..... .................................... I ............... ................................................... ..........................

1 2 0 ................. .......... ......... .................................. ................ .........................................................................
140

120
100
Lowest third
80 ....................................Highest third
60
40-



1985 1986 1987








If all other things are equal, higher sales per person involved is desirable. Higher sales
per employee viewed alone 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 or space being cared for. This could result in
tardy or untimely plant care, hence, slower growth and lower quality plus a failure to replant
empty space promptly. In this case, other indicators 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 a 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.


Capital Use
Capital Turnover. Annual turnover of owned capital value is the percentage that results
from dividing the value of own plants sold by the value of capital owned. Annual capital
turnover for the 1985 sample averaged 36.2 percent, for the 1986 group 33.5 percent, and for
1987 41.4 percent (Figure 8). This means that for samples in all years, annual sales were less
than half of the capital investment.
In general, larger percentage turnover numbers are desirable, for they indicate greater
sales per dollar of investment in the nursery. 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 captial turnover rate.


Capital Managed Per Person. Capital owned plus the value of capital items leased make-
up the total capital managed in a nursery. Capital managed per fulltime equivalent person
averaged $130,082 for the 1985 nurseries, $237,784 for the 1986 group, and $157,391 for the
1987 firms (Figure 9). There were substantial variations between firms on this measure. The
highest third of firms invested an average of $351,884 per person, while the lowest third
averaged $47,795 per employee.








Figure 8

Capital Turnover
Woody Ornamental Field Nurseries


Sales as a Percentage of Capital Owned
100%


80%


60%
60% ............................................... ........ ......................................................-- ------L-- i ........
-+ Lowest third
-*- Highest third


2 0 %................. ... ...... .. ..... .......................


0% MEN R
1985 1986 1987

Capital Managed Per Acre. Capital managed per acre of growing area averaged $50,260
per acre for the 1985 sample, $70,652 for 1986, and $23,309 for 1987 (Figure 10). The highest
third of firms' invested an average of $98,751 per acre, and the lowest third averaged $15,738
per acre. The average investment per acre was significantly lower for the 1987 sample, with
capital per acre less than half of that for the 1985 group, and about one third of the
investment for those in 1986.


Figure 9
Capital Managed Per Person
Woody Ornamental Field Nurseries
MDollars per Person (Thousands)



2 0 0 ........ .. ............................. .... h t th r ...
La en t third
o0 .... ...
0 MA dMVnil


Figure 10
Capital Managed Per Acre
Woody Ornamental Field Nurseries
Dollars/Acre (Thousands)

.0 .......... ........ .... ........... ........ ......
10 ............................ ......... .. ................... ...........
.................... .. ...... ....... g. g third


1ies loss 987










Distribution of Managed Capital. The distribution of the capital investment among land,
buildings, equipment, etc. is an important area of concern in management. Figure 11 indicates
the percentage distribution of total capital managed for the 1987 field nursery average.
Growing plants in inventory represented the largest share of capital managed, 57.9 percent.
Next in importance was land, 35.5 percent. Other lesser areas of capital investment were
machinery and equipment (2.8 percent), buildings and installations (1.8 percent), supplies (.4
percent), accounts receivable (1.3 percent), and cash on hand (.5 percent).






Figure 11
Distribution of Managed Capital
Woody Ornamental Field Nurseries, 1987

Plants 57.9%





.... Supply,Cash & A/R 2.2
.. .. Buildings & install 1.8%
S::::::: ::::::.:::: :Machinery & equip. 2.8%



Land 35.4%

Includes capital owned
plus capital leased











Costs of Production
For the purposes of this report, costs of production include not only cash outlays but
also non-cash costs and allowances that must be covered over time if the business is to
remain viable. The itemized budget for cash expenses presented in Appendix Table 5 and
summarized in Table 2 of this report is considered to be a minimal analysis of the costs of
production involved in an ornamental nursery enterprise. Included as a non-cash cost is an
allowance for a minimum return on investment. The interest rate used here is 12 percent. Our
intent is to array all costs so that an appreciation can be gained for the number and relative
magnitude of the various items, and to provide information for production planning based upon
a foundation of comprehensive cost analysis.


Costs by Expense Category (Appendix Table 5)
Costs by expense category were summarized from the annual profit and loss statement or
tax records of the participating nurseries. The cost categories were grouped into wages and
salaries, production supplies, other production costs, administrative and overhead, and non-cash
costs. These figures provide benchmarks for the relative magnitude of various cost items, and
may provide guidance for persons evaluating a Florida field nursery, either as a buyer, seller,
or lender.




Table 2--Costs of Production, three samples of field nurseries in Florida, 1985, 1986, and 1987.

1985 sample 1986 sample 1987 sample
ITEM

ALL Salaries and Wages. . $182,842 32.7% $102,398 35.8% $168,771 29.1%
Production Supplies ..... .. $112,854 20.2% $45,466 15.9% $122,950 21.2%
Other Production Costs. .... $30,654 5.5% $12,686 4.4% $26,394 4.6%
Administrative & Overhead $47,292 8.5% $28,845 10.1% $50,241 8.7%
Total Cash Costs . $373,641 66.8% $189,396 66.2% $368,356 63.6%
Total Non-Cash Costs .. 185,761 33.2 $96,796 33.8 $210,745 36.4%
TOTAL ALL COSTS . $559,403 100.0% $286,191 100.0% $579,101 100.0%

see also Appendix Tables 5 and 6 for more detail
see also Appendix Tables 5 end 6 for more detail










Salaries and wages.
The salary and wage group includes the operator's salary or time value, and employees
wages, salaries, benefits, and other payroll costs. As mentioned earlier, in some cases the
operator's salary was zero or was not appropriate, so a time-value was estimated based upon
the operator's expected earnings, or previous experience. The operator's salary or time value
averaged $31,541 for the 1985 sample, $33,654 for the 1986 group, and $37,996 for the 1987
nurseries. Wages, salaries, and associated expenses for employees averaged $151,301 for 1985,
$68,744 for 1986, and $130,775 for 1987. Thus, total expenses on wages and salaries averaged
$182,842 for 1985, $102,398 for 1986, and $168,771 for the 1987 sample (Table 2).
Production supplies
Expenses in this group include plants and seeds, containers, peat and soil, fertilizer and
lime, pesticides and chemicals, and other production supplies. Expenses for supplies for the
1985 sample averaged $112,854, for the 1986 group $45,466, and for 1987 nurseries $122,950.
Other production costs
Other production costs are facility repairs/maintenance and equipment operating costs.
For the 1985 group they averaged $30,654, for 1986 $12,686, and for 1987 nurseries $26,394.
Administrative and overhead
Administrative and overhead expenses usually cannot be assigned to any particular crop
or growing activity, yet must be covered in order to remain in business. This group of
expenses includes travel/trade shows, insurance, telephone, electric power, advertising, rent,
and other cash expenses. Administrative and overhead expenses averaged $47,292 for the 1985
group, $28,845 for 1986, and $50,241 for 1987.
Total cash costs
Total cash costs, including all items mentioned above, averaged $373,641 for 1985,
$189,396 for 1986, and $368,356 for the 1987 sample.
Non-cash costs
Non-cash costs include depreciation allowances on capital assets, decreases in 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 $185,761 for 1985,
$96,796 for 1986, and $210,745 for 1987.
Total all costs
Total costs averaged $559,403 for 1985, $286,191 for 1986, and $579,101 for the 1987
group.










Costs as a Percent of the Total Cost (Appendix Table 6)
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 with industry
averages which may represent a significantly different size of business. 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 Appendix Table 5 by the corresponding "Total all costs" figure at the
bottom of the table. Distribution of costs of production by category are shown graphically for
the 1987 industry average in Figure 12.
Salaries and Wages
Salaries and wages (includes operator) showed considerable variation between samples,
averaging 32.7 percent of all costs for the 1985 firms, 35.8 percent for 1986, and 29.1 for
1987. The 1986 sample of field nurseries reported significantly higher percentage of costs in
operator salaries (11.8 percent) than either the 1985 sample (5.6 percent) or 1987 sample (5.6
percent). Employees wages and salaries were highest for the 1985 group (27.0 percent), lowest
for the 1987 sample (22.6 percent), and intermediate for 1986 (24.0 percent).
Production Supplies
Expenses on production supplies ("plants and seeds" through "other production
supplies") also fluctuated considerably from sample to sample. Average costs for the 1985
group were 20.2 percent of total costs, 15.9 percent for the 1986 sample, and 21.2 percent for
1987. Thus, the lower cost of salaries and wages for the 1986 sample was completely offset by
higher expenses for production supplies. The largest share of the expenses for this group was
"plants and seeds" (9.6 percent to 11.1 percent). Expenses on "other production supplies",
including such miscellaneous items as burlap, plastic, and small tools, showed the largest
proportional variation, being 3.9 percent for 1985, 1.5 percent for 1986, and 4.0 percent for
1987.
Other Production Costs
Other production costs ("facility repairs" and "equipment operation") were relatively
stable, averaging 5.5 percent for 1985, 4.4 percent for 1986, and 4.6 percent for the 1987
nurseries.
Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 8.5 percent of all costs for
1985, 10.1 percent for 1986, and 8.7 percent for 1987. Here again, variation in distribution of
expenses from year to year was opposite the pattern for the previous category, "other
production costs".






Figure 12
Distribution of Costs of Production
Woody Ornamental Field Nurseries, 1987


Labor
... 29%
Supplies
21%


Other prod. costs ..

Admin, & overhead

Non-cash costs
36%











Total Cash Costs
Total cash costs as a percent of all costs for field nurseries were very close for 1985
and 1986 (66.8 percent and 66.2 percent). Field nurseries sampled for 1987 were about 3
points lower, at 63.6 percent.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged 33.2 percent of
total costs for 1985, 33.8 percent for 1986, and 36.4 percent for 1987. These percentages are
the differences between cash costs and total costs. Thus, the lower percent cash costs for
1987 were offset by the higher percent non-cash costs. The largest share of differences in
non-cash costs were due to the costs represented by interest on capital. Depreciation on
equipment, buildings, and other property improvements ranged from 3.1 to 5.7 percent of total
costs during the three years.


Cost Efficiency
While expenses as a percent of total costs facilitate comparing operating statements, they
do not allow easy comparison of growing costs in relation to the physical factors of
production or to product revenue. Costs per acre of growing area and costs per dollar value
of production are therefore important indicators.


Costs Per Acre of Growing Area (Appendix Table 8)
These figures were obtained by dividing each of the dollar cost figures in Appendix
Table 5 by the area in production shown in Appendix Table 1. This is growing area only, not
including, drives, roadways, ditches, etc. Costs per acre of growing area averaged $18,672 for
the 1985 sample, $14,455 for 1986, and $6,242 for 1987 (Figure 13). The highest third of the
firms had averaged $27,356 per acre, and the lowest third had $5,009. Deducting total costs
per acre (Table 2) from value of production per acre for these field nurseries (Table 1) leaves
an average return per acre of -$456 for the 1'985 firms, $2,365 for the 1986 group, and $1,357
for the 1987 nurseries. Thus, lowest average costs per acre for the 1987 nursery sample did
not result in the highest profit per acre. The higher costs for the 1985 firms do appear
related to the negative profit figure. Cash costs per acre (excluding depreciation, interest,
etc.) averaged $12,472 for 1985, $9,566 for 1986, and $3,980for the 1987 nurseries.









Figure 13


Costs Per Acre of Growing Area

Woody Ornamental Field Nurseries



Dollars/Acre (Thousands)


I-I


2 5 ........................................... .................... .......


2 0 ..... .... ......-. ... ........ ...... ...... ....... ................


0 ......


5 ...................


Highest third

-- Lowest third

*IZ Non-cash costs

3 Cash Costs



F77.:7:: : .


1985 1986


f-i


-~~-~~-~-~ ~"


- -- -


r--i


. .. ., ., ... j
. ,.. ., . .,
.,. ,. .,. ,.... ,,
. ., . ., ..
.. . ,. .


........ I ............. ....... ....
............
. . . .
.............
. . . .
....... .........
.. ...............
. . . . .
.... ............
.. .... ........
........... ......
.......... ......
............. ..


M


*


1987







Other things being equal, a lower cost per acre is desirable. Problems that cause costs
per acre to increase include inefficient planning and utilization of labor, insufficient
investment in labor saving capital 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 wire root ball cages in order to satisfy
the requirements of a premium market.


Costs Per Dollar's Worth of Production (AoDendix Table 8)
Costs per dollar value of production (sales adjusted for change in plant inventory value) is
a direct measure of long-term profitability. This is calculated by dividing the dollar costs
(Appendix Table 5) by the value of own plants sold adjusted for change in plant inventory
value (Table 1, and Appendix Table 1). So, a $1.00 cost per dollar value of production
represents the breakeven cost level. Total costs per dollar value of production for the 1985
field nurseries was $1.02, for the 1986 sample was $.86, and for the 1987 group was $.82
(Figure 14). Thus, total costs for the 1985 nurseries were 2 percent above the breakeven level,
whereas the 1986 and 1987 samples showed a net profit margin of 14 percent and 18 percent,
respectively. The least profitable third of the firms had a cost per dollar value of production
of $1.56. The most profitable third of firms achieved a cost of $.43, a profit margin of 67
percent! The deficit in costs per dollar value of production for the 1985 sample does not
actually represent a "loss" but merely a failure to meet the fair return allowance for interest
on capital, as will be seen later in the section "Income Summary".


Cash Costs Per Dollar's Worth of Sales (Appendix Table 9)
While total business position is indicated by costs per dollar of sales adjusted for
changes in inventory value, ability to meet current liabilities depends upon costs relative to
cash received. These figures were developed by dividing the dollar costs shown in Appendix
Table 5 by the value of own plants sold from Table 1. The sample of field nurseries for all
three years had average cash costs per dollar-of sales below the breakeven level, with $.81 for
the 1985 group, S.84 for 1986, and $.56 for 1987 (Figure 15). These figures translate into gross
profit margins of 19 percent, 16 percent, and 44 percent, respectively. The most profitable
third of firms had cash costs per dollar of sales of $.52, and the least profitable third of
firms had cash costs of $1.22 per dollar of sales.









Figure 14
Costs Per Dollar's Worth of Production
Woody Ornamental Field Nurseries

Dollars/Dollar
1.80
1.6 0 ................. .
1 .4 0 ...............................................................................................
1.40
1 .2 0 H.............................................................................ig h e s t th ird
Breake enpost
1.00B reao Lowest third
0.80 ................ Non-Cash Costs
0.20 .................... A .... .... .. .mrl Cash C................osts
0.40 -


0.00
1985 1986 1987



Figure 15
Cash Costs Per Dollar of Sales
Woody Ornamental Field Nurseries

Dollars/Dollar
1.20

1.00 Breakeven Cost...

0 .8 0 ................. .. ....... .. ...............

0.0 ..... Highest third
S \ I Lowest third


1985 1986 1987









In general, lower costs per dollar of sales are desirable. Rising costs per dollar of sales
are very common during periods of rapid expansion, because extra costs of a larger
operation are incurred before the nursery can experience accompanying extra sales. During
inflationary times, failure to get price increases as fast as costs are going up will also cause
it. While prices received are not always under the direct control of the nurseryman, other
things mentioned earlier are under his direction. These include things that affect rates of
production, level of costs, and labor efficiency. Examples include letting plants continue to
grow after reaching salable size without getting much if any more money for them, letting
space sit vacant too long between the time a plant is sold and another is put in its place to
start growing again, selecting varieties that grow slower or are priced low relative to their
growing time and space requirements, having disease and quality problems that reduce the
yield of salable plants, failing to plan and manage for efficient utilization of labor, ignoring
needed investments in labor saving equipment and facilities, not checking for the best price
before purchasing needs, experiencing theft or destruction of plants or supplies, practicing less
than optimum fertilizing and growing techniques, and pursuing less desirable markets and
marketing programs.


Income Summary
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 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 operations. Figure 16 shows the components of income
summarized.
Total Gain
Total gain refers to the total value produced by the year's operations: the sum of plant
sales, changes in plant and supply inventory values, and miscellaneous income. Increases in
inventories of supplies were negligible. Miscellaneous income refers to income received from
sources other than plant sales, including rent, interest on accounts, delivery or packaging
charges, and sales of supplies. This averaged from about $4,000 to $8,000 for the three
samples. Total gain averaged $553,985 for the 1985 nurseries, $337,482 for 1986 firms, and
$710,820 for 1987.
Cost Deductions and Net Nursery Income
Total costs except the operator's salary and allowance for interest on capital are
deducted from total gain to give net nursery income. Total deductions averaged $375,370 for
1985, $172,047 for 1986, and $349,946 for the 1987 group.










Table 3--Income Summary, three samples of field nurseries in Florida, 1985, 1986, and 1987.

1985 1986 1987
ITEM unit sample sample sample

TOTAL GAIN ................... S 553,985 337,482 710,820
Total Cost Deductions . . ... $ (375,370) (172,047) (349,946)
NET NURSERY INCOME .............. .$ 178,615 165,435 360,874
Operator's salary or time value ....... .. (31,541) (33,654) (37,996)
RETURN TO CAPITAL. . . . ... 147,074 131,781 322,878
--Percent. . . . ...... . 11.57 19.65 20.27

see also Appendix Table 10 for more detail.


Net nursery income is the total return for the year for the time and managerial skills of
the operator plus the capital invested in the operation. Average net nursery income was
$178,615 for 1985, $165,435 for 1986, and $360,874 for the 1987 firms. Thus, the large
difference in sales between the 1985 and 1986 sample averages were mostly eliminated after
accounting for other sources of gain and total costs. The higher sales for the 1987 group
translated into an even greater proportionate advantage in net nursery income.




Figure 16

Distribution of Total Gain
Woody Ornamental Field Nurseries

Dollars (Thousands)
800


6 0 0 .. .................... ........... ...... ....

.I ........: :; \ Return to Capital
400 ........ .................. ... Return to Operator
7 r Expenses


1985 1986 1987







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 investment in the nursery. When the owner and operator are the same person, dividing
net nursery income between the operator and return to capital is not important. However,
when the owners are outside investors, accurate division is crucial. Average operator salaries
were given in the previous section "Dollar Costs by Expense Category." Return to capital
averaged $147,074 for the 1985 sample, $131,781 for the 1986 group, and $322,878 for 1987.
Dividing net nursery income by the value of capital invested gives the rate of return on
the investment. Rate of return is a very commonly used indicator for evaluating an
investment or for selecting between investment alternatives. For example, this is equivalent to
the widely quoted yields for capital market instruments such as certificates of deposit,
treasury notes, bonds, etc., which are reported on an annualized basis unless otherwise noted.
Average value of capital invested for each of the three years was given in Table 1.
Figure 17 shows that average rate of return on capital was 11.6 percent for the 1985 sample,
19.7 percent for the 1986 group, and 20.3 percent for 1987. Thus, for 1987, for every dollar
invested in these field nurseries, there was a return of 20 cents. The negative 2 percent net
profit margin for the average nursery in the 1985 sample, as discussed above in relation to
total costs per dollar value of production, was not a loss, but simply represents a return on
investment somewhat less than the 12 percent allowance. The highest third of the firms had
an average rate of return of 56.0 percent, and the lowest third a minus 4.1 percent.

Figure 17
Return to Capital
Woody Ornamental Field Nurseries

Percentage Profit to Capital Owned
60%



40%
3 0 % H ig he st th ir .. .................... .............. ............. ............................... ..... ... ......................
0 -, Hig heet third

20% .. -- Lowest third................

% ..................................... .......... ........ ....... ............ .

0%
I I I I I
-10% '
1985 1986 1987








Statement of Financial Position (Apoendix Table 11)
The statement of financial position summarizes the assets and liabilities of field
nurseries. These data represent the mid-year financial situation of the firms, derived as an
average of year-beginning and year-end balance sheet figures. Figure 18 illustrates the major
components of the statement of financial position for field nurseries in 1985, 1986 and 1987.
Current Assets
Current assets represent cash, or items deemed convertible to cash within one year's
time: cash on hand, accounts receivable, and inventory values.
Cash on hand includes funds in checking accounts, savings accounts, and money market
funds. Average cash on hand was $25,551 for the 1985 sample, $21,790 for the 1986 group,
and $11,680 for 1987 firms. The main function of cash on hand is to pay current liabilities. As
a percentage of total cash costs, these amounts represented 6.8 percent, 11.5 percent, and 3.2
percent, respectivley.
Accounts receivable are uncollected payments due from all sources. The majority of
these are trade accounts for plants sold. Generally, this figure should be minimized because
uncollected funds deprive the firm of their use. Accounts receivable averaged $36,972 for 1985,
$8,230 for 1986, and $27,215 for the 1987 firms. As a percentage of annual sales, these
amounts represented 8.0 percent, 3.7 percent, and 4.1 percent, respectivley.
Inventory values include growing plants and supplies, which were presented previously in
Table 1. The combined value of inventories averaged $1,069,809 for 1985, $473,843 for 1986,
and $1,259,172 for the 1987 nurseries. Ornamental trees in field production may not be
considered a current asset to some because they normally would not be sold for two or more
years hence. However, the inventory data collected were supposed to represent the market
value of the crops in their current state of development, so plant inventory is reported as a
current asset.
Total current assets averaged $1,132,330 in 1985, $503,864 for 1986, and $1,298,067 for
the 1987 group.
Long Term Assets
These 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 depreciation provides an idea of the degree to which capital
assets have been depleted. Original investments averaged $248,045 for 1985, $214,170 for
1986, and $371,975 for the 1987 firms. Subtracting accumulated depreciation leaves a current
value of $138,434 for 1985, $166,886 for 1986, and $294,927 for the 1987 nurseries. As a
percentage of the original investment, these current values represent 55.8 percent, 11.5








percent, and 3.2 percent, respectively. Thus, of the three samples of nurseries participating in
the Nursery Business Analysis Program, the 1987 sample had the most completely depreciated
long term assets, and the 1986 group was next.
Total assets
The sum of short term and long term assets gives average total assets of $1,270,764 for
1985, $670,750 for 1986, and $1,592,994 for the 1987 firms. These amounts are the same as
reported for "total owned capital" in Table 1 and Appendix Table 1.
Liabilities
Liabilities may be "current" (payable during the current year) or "long term"
(payable at some time after the current year).
Current liabilities averaged $11,720 for 1985, $7,156 for 1986, and $21,553 for the 1987
group. The ratio of cash and accounts receivable to current liabilities, known as the "quick
ratio", is a standard indicator of liquidity, the ability to pay current operating expenses. The
quick ratio for these three samples was lower for each succeeding sample, ranging from 5.33
for the 1985 nurseries, to 4.12 for the 1986 group, to 1.81 for the 1987 firms. However, these
are all acceptably solvent current financial positions, as there is more than enough (1.8 times
for 1987) current assets to pay current obligations.
Long term liabilities include notes payable and mortgages. They averaged $90,264 for
1985, $112,604 for 1986, and $131,582 for the 1987 group. The ratio of current liabilities to
long term liabilities was .130 for 1985, .064 for 1986, and .164 for 1987.
Total liabilities. The sum of current and long-term liabilities gives average total
liabilities of $101,984 for 1985, $119,760 for 1986, and $153,135 for 1987. The ratio of total
assets to total liabilities was 12.5, 5.6, and 10.4, respectively, for the three years.
Net Worth
Net worth is the difference between total assets and total liabilities. This is the actual
value of the owner's share of the assets, as opposed to the lenders'claims. The average net
worth of the field nurseries sampled was $1,168,780 for 1985, $550,990 for 1986, and $1,439,859
for 1987.








Figure 18

Assets and Liabilities

Woody Ornamental Field Nurseries


Dollars (Thousands)


1985


1800

1600

1400

1200

1000

800

600

400

200

0


M Net Worth

Ui Long Term Llabll.

Current Liabilities

Li Long Term Assets

EE Current Assets


1987


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


L


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


--


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

. ..... I ......... .................. .1.

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



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

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


1986







JRS: 10-28-88


Total Profitability Model
The Total Profitability Model combines information from the operating statement and
statement of financial position in a graphical presentation to illustrate how assets, liabilities,
and profit margin work together to yield the firm's return on net worth. Figure 19 shows the
three sections of the profitability model: margin management, asset management and leverage
management. Data for the years of 1985, 1986, and 1987 are given in the top, middle, and
bottom of each cell in the model. Data for 1987 will be discussed here to illustrate the
calculations.
Margin Management
From total gain ($710,820) is subtracted total deductions ($349,946) and the operator's
salary ($37,996) to give return to capital ($322,878). This is divided by total gain to yield an
average net profit margin of 45.4 percent.
Asset Management
Current assets ($1,298,067) plus long term assets ($294,927) make total assets of
$1,592,994. This is divided into total gain ($710,820) to give an asset turnover rate of 0.45.
Asset turnover multiplied by net profit margin (45.4 percent) results in an average return to
capital of 20.3 percent.
Leverage Management
Current liabilities ($21,553) plus long term liabilities ($131,582) gives average total
liabilities of $153,135. This is subtracted from total assets to yield average net worth of
$1,439,859. Total liabilities plus net worth ($1,592,994) divided by net worth gives a leverage
factor of 1.11. This is really the ratio of total assets under one's control to net worth.
Leverage times rate of return to capital (20.3%) gives a return on net worth of 22.4 percent.


Growth in the Business
Growth in sales of a business can and is normally considered to be a healthy sign. It
can 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 to be planned and
orderly so that it contributes to the profitability of an operation. By way of contrast, too
rapid an expansion program can result in excessive increases in costs and strong needs for
cash before the new plants have reached salable size. Growth may look good on paper. But
tomorrow's potential sales (plant inventory) may not be satisfactory for paying today's bills.
Growth, though desirable in an economic sense, needs to be carefully planned and executed.










MARGIN MANAGEMENT


NET PROFIT
MARGIN


IATE OF
RETURN TO
CAPITAL


RETURN ON


LEVERAGE MANAGEMENT


TOTAL LIABILITIES


Figure 19.--Total profitability model, three samples of field nurseries in
Florida, 1985, 1986, 1987











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. The Appendix tables are structured for this purpose. The formulas for making thes
calculations are shown for each line in Appendix Tables 2 through 4. The results may be
written on the lines provided for this purpose on each table. Another alternative is to
acquire the University of Florida microcomputer program, WOODYNBA.BAS, for making
these calculations. Either alternative should provide some valuable insight into the business
side of operating a woody ornamental nursery. It should improve management decisions
concerning things that affect the profitability of the nursery operation.
Nursery operators who find this kind of information 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. We
especially need more participants in the Field Nursery program to provide a sounder and
statistically more reliable averages. If you would like to become a participant, contact your
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.


PvP










APPENDIX
Appendix Table of Contents
Dage
D efinitions . . . . . . . . . 30
Making your own calculations ................... ........... 31
Appendix Tables . . . . . . . . . 33



List of Appendix Data Tables


Appendix Table

1 Size of business, three samples of field nurseries in Florida,
1985, 1986, and 1987 . . . . .


Page


. . . 33


2 Land use indicators, three samples of field nurseries in Florida,
1985, 1986, and 1987 . . . . . .. 33

3 Labor use indicators, three samples of field nurseries in Florida,
1985, 1986, and 1987 . . . . . .. 34

4 Capital use indicators, three samples of field nurseries in Florida,
1985, 1986, and 1987 ........................... 34

5 Costs by expense category, three samples of field nurseries in
Florida, 1985, 1986, and 1987 . . . . . ... 35

6 Percent of total costs by expense category, three samples of field
nurseries in Florida, 1985, 1986, and 1987 . . . .... 36

7 Costs per acre of production area, three samples of field nurseries
in Florida, 1985, 1986, and 1987 ............ ... ... ..... 37

8 Costs per dollar's worth of production, three samples of field
nurseries in Florida, 1985, 1986, and 1987 . . . .... 38

9 Cost per dollar's worth of sales (no adjustment for change in plant
inventory), three samples of field nurseries in Florida, 1985,
1986, and 1987 . . . . . . . 39

10 Income summary, three samples of field nurseries in Florida, 1985,
1986, and 1987 . . . . . . . 40

11 Statement of Financial Position, three samples of field nurseries in
Florida, 1985, 1986, and 1987 ...................... 40









DEFINITIONS


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 growing-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 obtaining the number of
fulltime employees for this report was to divide the total annual payroll hours for the
nursery by 2080, then add the number of family and management people not paid on an hourly
basis.

Capital owned: the current value (cost less depreciation taken in prior years) of capital
assets, or current investment in the nursery operation. Related debt is not deducted in this
determination of the value of capital owned.

Capital managed: the value 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 the value of 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 inventories, and
miscellaneous cash income. It represents the total effect of the year's operation, be it in the
form of cash received of 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 the 12 percent non-cash interest
allowance 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.








MAKING YOUR OWN CALCULATIONS


For those who wish to analyze their own operation and compare the results with the
findings of this report, we have two options. One is a manual method. To do it manually,
you need to collect for your nursery the data shown in Appendix Table I and Appendix
Table 5. Lines are provided for entry of your data. Then, calculate your nursery data for
each line of Appendix Tables 2, 3 and 4. The formula for making that calculation is shown on
each line. For example, the first line of Appendix Table 2, "Value of own plants sold per
square foot" shows a formula in parentheses of Table IA/IC. The slash mark (/) stands for
division. The Table 1A stands for the A line of Appendix Table 1, and 1C stands for the C
line. Hence, to calculate your "Value of own plant sold per acre,"divide your sales figure on
line A of Appendix Table 1 by your acres of growing area on line C of Appendix Table 1.
And so on for each line of Appendix Tables 2, 3 and 4.

Calculations starting with Appendix Table 6 and continuing through Appendix Table 9
are similar. These calculations are made by dividing each line of Appendix Table 5 by the
appropriate figure as follows:

For Appendix Table 6, divide by your total all costs figure at the bottom of Appendix
Table 5

For Appendix Table 7, divide by your square footage figure on line D (or square feet
figure on line C if your prefer) of Appendix Table 1.

For Appendix Table 8, divide by your total value of production figure on line B of
Appendix Table 1.

For Appendix Table 9, divide by your sales figure on line A of Appendix Table 1

For Appendix Tables 10 and 11, formulas are not shown. However completion of your own
data set for those tables is needed in order for you to utilize the profitability model.
Instructions for Appendix Table 10 are as follows:

Line A: Value of own plants sold ...... Appendix Table 1A
Line B: Change in plant inventory value Appendix Table IB-lA
Line C: Supply inventory increase ..... from your beginning and ending
supply inventory data, not
shown previously
Line D: Miscellaneous income ........ from your business records, not
shown previously, increases are shown
here. Decreases go on Appendix Table 5.
Line E: Total Gain ............. sum of lines A, B, C and D.
Line F: Deduct cash costs ......... from Appendix Table 5 (subtract
operators salary)
Line G: Deduct non-cash costs ....... from Appendix Table 5 (subtract
interest on capital)
Line H: Total deductions .......... sum lines F and G
Line I: Net nursery income ......... line E minus line H
Line J: Deduct operator's salary ...... from line 1 of Table 5
Line K: Return to capital ......... line I minus line J
Line L: Rate of return to capital ..... line K divided by Appendix
Table 1, line P










Instructions for Appendix Table 11 are as follows:


Line A: Cash on hands . . Appendix Table 1 line O
Line B: Accounts Receivable ........ Appendix Table 1 line N
Line C: Plant inventory .......... Appendix Table 1 line I
Line D: Supply inventory .......... Appendix Table 1 line M
Line E: Total current assets ........ sum lines A,B,C and D
Line F: Machinery & Equipment ....... Appendix Table 1 line K
Line G: Buildings and fixtures ....... Appendix Table 1 line J
Line H: Land ................ Appendix Table 1 line L
Line I & J: Original cost subtotal and accum. depreciation
.... ......... ignore data from Appendix. Table IJ, 1K,
and IL should be current book value, not
original cost.
Line K: Total long term assets ....... sum lines F,G and H
Line L: Total assets ............ sum lines E and I
Line M: Current liabilities ........ from your records, not shown in
earlier tables
Line N: Long term liabilities ....... from your records, not shown in
earlier tables
Line O: Total liabilities ......... sum line K and L
Line P: Net worth ............. line J minus line M
Line O: Total liabilities and net worth sum lines M and N

Denotes that data required for the profitability model.


A second alternative for performing your own business analysis for those who have an
MSDOS computer is to order IFAS microcomputer program number 003, WOODYNBA for a cost
of $20. Mailing address is:

IFAS Software Support Office
Building 120, Room 203
University of Florida
Gainesville, FL 32611

This program still requires you to collect the same data requested for the manual
calculation method described above, but once the data is entered, all calculations will be done
automatically for you.













Appendix Table 1--Size of Business, three samples of field nurseries in Florida, 1985, 1986, and 1987.

1985 1986 1987 Your
ITEM unit sample simple ample Nursery
.... ................................................. o..... ...... ............ ............................


A Value of own plants sold . . .
B Sales adjusted for plant inventory change..


S 459,480
S 545,787


224,914 660,000
332,971 705,007


C Sq. ft of growing area . . .
D --Acre equivalent of total nursery area.
E FulLtime equivalent persons . .
.............Capital Owned ............
F Growing plants . . . .
G Land . . . . .
H Machinery & equipment . . .
I Bldgs, fences, wells . . .
J Supply inventory . . .
K Accounts receivable . . .
L Cash/checkbook balance . . .

M Total Owned Capital. . . .
............C-apital Managed-............
N Growing plants . . . .
0 Land . . . . .
P Machinery & equipment . . .
0 BLdgs, fences, wells . . .
R Supply inventory . . .
S Accounts receivable . . .
T Cash/checkbook balance . . .


U Total Managed Capital . . .


S. q.ft. 1,305,023
S. acres 30.0
. number 11.6


1,053,863
45,506
51,107
41,822
15,945
36,971
25,551

1,270,764


862,428
19.8
5.9


470,806
114,833
38,321
13,731
3,038
8,230
21,790

670,750


4,041,374
92.8
13.7


1,251,248
214,463
54,343
26,120
7,925
27,215
11,680

1,592,994


1,053,863 470,806 1,251,248
280,506 840,667 766,563
51,107 38,321 59,899
41,822 15,956 37,976
15,945 3,038 7,925
36,971 8,230 27,215
25,551 21,790 11,680

1,505,764 1,398,808 2,162,505


~S= = DLI= = tL-= = I ISI


Appendix Table 2--Land use indicators, three samples of
and 1987.


field nurseries in Florida, 1985, 1986,


1985 1986 1987 Your
ITEM unit sample sample sample Nursery


Value of plants sold/sq.ft. (Table 1A/1C) cents 35.2 26.1 16.3
--adj. for change in inventory. (Table 1B/1C) cents 41.8 38.6 17.4


Value of own plants sold/acre (Table 1A/1D) S 15,337
--adj. for change in inventory. (Table 18/1C) $ 18,218

Plant inventory value/acre. (Table 1F/1D) $ 35,177


11,360
16,818

23,780


7,114
7,599

13,487


====Lt=====~lt=I-ID===t~-P====='=-==-D=














Appendix Table 3--Labor use indicators, three samples of field nurseries in Florida, 1985, 1986,
and 1987.

1985 1986 1987 Your
ITEM unit sample sample sample Nursery
........................................................................................................


Value of own plants sold/worker (Table 1A/1E)
--adj. for plant inventory chang(Table 1B/1E)


S 39,694
S 47,150


Sq.ft of total nursery area/work(Table 1C/1E) sq.ft. 112,740


146,604 294,139


Appendix Table 4--Capital use indicators, three samples of field nurseries in Florida, 1985, 1986,
and 1987.


1985
ITEM unit sample
...................................................................


1986 1987 Your
sample sample Nursery
.....................................


Owned capital turnover. ..... .(Table 1A/1M)
Managed capital turnover. (Table 1A/1U)

Capital owned/person. .... (Table 1M/1E)
Capital managed/person. ... .(Table 1U/1E)

Capital owned/acre. . (Table 1M/1D
Capital managed/acre. ... .(Table 1U/1D)


X 36.2
X 30.5


33.5
16.1


109,781 114,021 115,941
130,082 237,784 157,391


S 42,416
S 50,260


33,879
70,652


17,170
23,309


---Managed Capital Per Person In---
Growing plants . .
Land . . .
Machinery & equipment . .
Bldgs, fences, wells . .
Accounts receivable . .

---Managed Capital Per Acre In--
Growing plants . .
Land . . .
Machinery & equipment . .
BLdgs, fences, wells . .
Accounts receivable . .

---Distribution of Managed Capital
in growing plants . .
in land . . .
in machinery & equipment .
in buildings & wells . .
in supply inventory . .
in accounts receivable .
in cash/checkbook balance .

TOTAL . . .


(Table 1N/1E)
(Table 10/1E)
(Table 1P/1E)
(Table 1Q/1E)
(Table 1S/1E)


(Table
(Table
(Table
(Table
(Table

In---
(Table
(Table
(Table
(Table
(Table
(Table
(Table


1N/1D)
10/10)
1P/1D)
10/1D)
1S/1D)


1N/1U)
10/1U)
1P/1U)
10/1U)
1R/1U)
1S/1U)
1T/1U)


38,233
56,602


48,036
51,312


41.4
30.5


91,043
24,233
4,415
3,613
1,377


35,177
9,363
1,706
1,396
532


80,032
142,905
6,514
2,712
516


23,780
42,461
1,936
806
153


33.7
60.1
2.7
1.1
0.2
0.6
1.6

100.0


91,068
55,792
4,360
2,764
577


13,487
8,262
646
409
85


57.9
35.4
2.8
1.8
0.4
1.3
0.5

100.0


70.0
18.6
3.4
2.8
1.1
2.5
1.7

100.0


==-'t-=====t====5='=====D=I2======-EZ===


==--=1======5========t====I=====T====tr










Appendix Table 5--Costs by expense category, three samples of field nurseries in Florida, 1985, 1986,
and 1987.
1985 1986 1987 Your
ITEM units sample sample sample Nursery


Operator's salary .............. $ 31,541 33,654 37,996
Other wages ................. $ 151,301 68,744 130,775

LABOR TOTAL ................. S 182,842 102,398 168,771

Plants & seeds. ............... S 53,734 31,559 64,096
Containers. .................. 5,976 1,782 5,279
Peat & soil ................. S 8,953 2,579 11,816
Fertilizers & Lime. ............. $ 13,704 3,223 8,127
Pesticides & chemicals. ............ $ 8,631 1,888 10,182
Other production supplies .......... S 21,855 4,435 23,451

SUPPLIES TOTAL. ............... $ 112,854 45,466 122,950

Facility repairs. .............. $ 8,225 4,015 13,416
Equipment operation ............. $ 22,429 8,672 12,978

OTHER PRODUCTION COSTS TOTAL. ........... S 30,654 12,686 26,394

Travel. .................... 3,961 2,145 4,462
Insurance .................. $ 6,193 8,154 7,617
Telephone .................. S 3,204 2,076 3,883
Electricity ................. S 4,588 1,787 5,394
Taxes & Liscenses .............. $ 2,581 3,624 7,630
Advertising ................. $ 2,569 1,848 3,120
Rent-land/buildings ............. $ 2,823 5,013 6,804
Other cash costs. .............. $ 21,373 4,197 11,330

ADMINISTRATIVE & OVERHEAD COSTS TOTAL 47,292 28,845 50,241
S LL= ======'= -===-=====-
TOTAL CASH COSTS. .............. $ 373,641 189,396 368,356

Depreciation-machinery/equipment ....... S 12,481 10,176 12,738
Depreciation-buildings/etc. .......... S 8,512 6,130 5,200
Supply inventory decrease .......... S 12,277 0 1,649
Interest on capital ............. S 152,492 80,490 191,159

TOTAL NON-CASH COSTS. ............ $ 185,761 96,796 210,745

TOTAL ALL COSTS ............... S 559,403 286,191 579,101







Appendix Table 6--Percent of total costs by expense category, three samples of field nurseries in
Florida, 1985, 1986, and 1987.

1985 1986 1987 Your
ITEM units sample sample sample Nursery


Operator's salary .............. X 5.6 11.8 6.6
Other wages ................. X 27.0 24.0 22.6

LABOR TOTAL ................. % 32.7 35.8 29.1

Plants & seeds. ............... X 9.6 11.0 11.1
Containers. ................. X 1.1 0.6 0.9
Peat & soil ................. X 1.6 0.9 2.0
Fertilizers & time. ............. X 2.4 1.1 1.4
Pesticides & chemicals. . . X 1.5 0.7 1.8
Other production supplies .......... X 3.9 1.5 4.0
........... ........... ...........-
SUPPLIES TOTAL. ............... X 20.2 15.9 21.2

Facility repairs. .............. X 1.5 1.4 2.3
Equipment operation ............. X 4.0 3.0 2.2

OTHER PRODUCTION COSTS TOTAL. .......... X 5.5 4.4 4.6

Travel. ................... X 0.7 0.7 0.8
Insurance .................. X 1.1 2.8 1.3
Telephone .................. X 0.6 0.7 0.7
Electricity ................. X 0.8 0.6 0.9
Taxes & liscenses .............. X 0.5 1.3 1.3
Advertising ................. X 0.5 0.6 0.5
Rent-land/buildings . . ... 0.5 1.8 1.2
Other cash costs. .............. X 3.8 1.5 2.0

ADMINISTRATIVE & OVERHEAD COSTS TOTAL % 8.5 10.1 8.7

TOTAL CASH COSTS. .............. X 66.8 66.2 63.6

Depreciation-machinery/equipment ....... % 2.2 3.6 2.2
Depreciation-buildings/etc. ......... X 1.5 2.1 0.9
Supply inventory decrease .......... % 2.2 0.0 0.3
Interest on capital ............. X 27.3 28.1 33.0

TOTAL NON-CASH COSTS. ............ 33.2 33.8 36.4

TOTAL ALL COSTS ............... X 100.0 100.0 100.0
I==============OI===P========S===========================================










Appendix Table 7--Costs per acre, three samples of field nurseries in Florida, 1985, 1986, and 1987.


1985 1986 1987 Your
ITEM units sample ample simple Nursery
........... ..................................................................................

Operator's salary .............. $ 1,053 1,700 410
Other wages ................. S 5,050 3,472 1,410
...................... ..........
LABOR TOTAL ................. 8 6,103 5,172 1,819

PLants & seeds. ............... $ 1,794 1,594 691
Containers. .................. S 199 90 57
Peat & soil ................. 299 130 127
Fertilizers & Lime. ............. 457 163 88
Pesticides & chemicals. ............ S 288 95 110
Other production supplies .......... S 729 224 253

SUPPLIES TOTAL. ............... 3,767 2,296 1,325

Facility repairs. ............... 275 203 145
Equipment operation ............. 5 749 438 140

OTHER PRODUCTION COSTS TOTAL. ......... 1,023 641 284

Travel. ................... 132 108 48
Insurance .................. S 207 412 82
Telephone .................. S 107 105 42
Electricity ................. S 153 90 58
Taxes & licenses ..... ......... 86 183 82
Advertising ............... 86 93 34
Rent-land/buildings ............. S 94 253 73
Other cash costs. . . . .. S 713 212 122

ADMINISTRATIVE & OVERHEAD COSTS TOTAL .. S 1,579 1,457 542
s=g======Z =z gg====s=gz Ws====
TOTAL CASH COSTS. .............. S 12,472 9,566 3,970

Depreciation-machinery/equipment ...... S 417 514 137
Depreciation-buildings/etc. .......... 284 310 56
Supply inventory decrease .......... S 410 0 18
Interest on capital ............. S 5,090 4,065 2,060

TOTAL NON-CASH COSTS ............... S 6,200 4,889 2,272

TOTAL ALL COSTS ............... S 18,672 14,455 6,242

MUZU-MUMS ... E=e===WxSz=WtxZ ... LxWz&W==.==.=W==xz WWW .... W........... Z.Basa oza sam









Appendix Table 8--Cost in cents per dollar's worth of production, three samples of field nurseries in
Florida, 1985, 1986, and 1987.
====S=PII= = =2= =-----------==DrL


ITEM units


Operator's salary . . .. cents
Other wages. . . . cents

LABOR TOTAL . . . .. cents


Plants & seeds . .
Containers . .
Peat & soil . .
Fertilizers & lime. .
Pesticides & chemicals. .
Other production supplies


cents
cents
cents
cents
cents
cents


SUPPLIES TOTAL. . . . ... cents


Facility repairs. . . . .
Equipment operation . . . .

OTHER PRODUCTION COSTS TOTAL . .

Travel. . . . .. ..
Insurance . . . . .
Telephone . . .. .. .
Electricity . . . . .
Taxes & licenses . . . .
Advertising . . .. .. .
Rent-land/buildings . . . .
Other cash costs. . . . .

ADMINISTRATIVE & OVERHEAD COSTS TOTAL .


TOTAL CASH COSTS . . . .


Depreciation-machinery/equipment.
Depreciation-bui dings/etc .
Supply inventory decrease .
Interest on capital . .


1985 1986 1987 Your
sample sample sample Nursery


5.8
27.7

33.5

9.8
1.1
1.6
2.5
1.6
4.0

20.7


cents 1.5
cents 4.1

cents 5.6
cents
cents 0.7
cents 1.1
cents 0.6
cents 0.8
cents 0.5
cents 0.5
cents 0.5
cents 3.9

cents 8.7

cents 68.5


cents
cents
cents
cents


TOTAL NON-CASH COSTS. . . ... cents

TOTAL ALL COSTS . . . ... cents


2.3
1.6
2.2
27.9

34.0

102.5


10.1
20.6

30.8

9.5
0.5
0.8
1.0
0.6
1.3

13.7

1.2
2.6

3.8

0.6
2.4
0.6
0.5
1.1
0.6
1.5
1.3

8.7

56.9

3.1
1.8
0.0
24.2

29.1

86.0


5.4
18.5

23.9

9.1
0.7
1.7
1.2
1.4
3.3

17.4

1.9
1.8

3.7

0.6
1.1
0.6
0.8
1.1
0.4
1.0
1.6

7.1

52.2

1.8
0.7
0.2
27.1

29.9

82.1


===r=========t======-r=====5-====r===1==








Appendix Table 9--Costs in cents per dollar's worth of sales (no adjustment for change in plant
inventory), three samples of field nurseries in Florida, 1985, 1986, and 1987.
-=-----s==g=s=s s==g-=s-- -== -----= s--s -- --== -------S=g =sss =
1985 1986 1987 Your
ITEM units Nursery

Operator's salary .............. cents 6.9 15.0 5.8
Other wages ........... ...... cents 32.9 30.6 19.8

LABOR TOTAL ................. .cents 39.8 45.5 25.6

Plants & seeds. ................ cents 11.7 14.0 9.7
Containers. ................. cents 1.3 0.8 0.8
Peat & soil ................. cents 1.9 1.1 1.8
Fertilizers & Lime. . . .. cents 3.0 1.4 1.2
Pesticides & chemicals. ........... cents 1.9 0.6 1.5
Other production supplies .......... cents 4.8 2.0 3.6

SUPPLIES TOTAL. ..... .......... cents 24.6 20.2 18.6

Facility repairs. .............. cents 1.8 1.8 2.0
Equipment operation ............. cents 4.9 3.9 2.0

OTHER PRODUCTION COSTS TOTAL. ......... cents 6.7 5.6 4.0
cents
Travel .......... ........ cents 0.9 1.0 0.7
Insurance .................. cents 1.3 3.6 1.2
Telephone . . . ... cents 0.7 0.9 0.6
Electricity ........... ...... cents 1.0 0.8 0.8
Taxes & Liscenses .............. cents 0.6 1.6 1.2
Advertising ................ .cents 0.6 0.8 0.5
Rent-land/buildings . . ... cents 0.6 2.2 1.0
Other cash costs. . . . ... cents 4.7 1.9 1.7

ADMINISTRATIVE & OVERHEAD COSTS TOTAL . cents 10.3 12.8 7.6

TOTAL CASH COSTS. .............. cents 81.3 84.2 55.8

Depreciation-machinery/equipment ....... cents 2.7 4.5 1.9
Depreciation-buildings/etc. ......... cents 1.9 2.7 0.8
Supply inventory decrease .......... cents 2.7 0.0 0.2
Interest on capital ............. cents 33.2 35.8 29.0

TOTAL NON-CASH COSTS. ............ cents 40.4 43.0 31.9

TOTAL ALL COSTS ............... cents 121.7 127.2 87.7
--------:--- -------= -- --==-..... = =








Appendix Table 10--Income Summary, three samples of field nurseries in Florida, 1985, 1986, and 1987.

------s=s s=== =ss == =s= ===s===ss============
1985 1986 1987 Your
ITEM units Nursery
...................................... ................................................................


A Value of own plants sold . . .
B Change in plant inventory value. . .
C Increase in supply inventory . . .
D Miscellaneous cash income . . .

E TOTAL GAIN . . . . .

F Deduct cash costs except operator's salary .
G Deduct non-cash costs except interest on capit

H Total Deductions . . . .

I NET NURSERY INCOME . ..........
J Operator's salary or time value. ........

K RETURN TO CAPITAL. . . . .
L --Percent. ..................


S 459,480
S 86,307
S 0
$ 8,198

$ 553,985

S (342,101)
$ (33,270)

$ (375,370)

$ 178,615
S (31,541)
-----------
$ 147,074
X 11.57


224,914
108,057
549
3,962

337,482

(155,741)
(16,306)

172,047

165,435
(33,654)

131,781
19.65


660,000
45,007
0
5,813

710,820

(330,359)
(19,586)

(349,946)

360,874
(37,996)

322,878
20.27


I==5r ==II == =~~==1= ==5=1==~ ==DI=


Appendix Table 11--Statement of Financial Position,
1985, 1986, and 1987.


three samples of field nurseries in Florida,


1985 1986 1987 Your
ITEM units Nursery


CURRENT ASSETS- - -.- - - -
A Cash/checkbook balance . . .. S
B Accounts receivable. . . ... $
C Plant inventory value. . . ... .
D Supply inventory value . . .. .

E Total CURRENT Assets . . .. $


LONG TERM ASSETS- - .- - -
F Machinery & Equipment . . .
G Buildings & Fixtures . . . .
H Land . . . . . .

I Sub-total (original cost) . . .

J Less Accumulated Depreciation . .

K Total LONG TERM Assets . . .

L TOTAL ASSETS . . . . .

LIABILITIES AND NET WORTH- - - -
M Current Liabilities . . .
N Long Term Liabilities . . .

0 Total LIABILITIES . . . .

P NET WORTH . . . . .

Q TOTAL LIABILITIES & NET WORTH . .


25,551
36,971
1,053,863
15,945

1,132,330


S 129,220
$ 73,320
$ 45,506

$ 248,045

$ 109,611

$ 138,434

S 1,270,764


S 11,720
$ 90,264

$ 101,984


21,790
8,230
470,806
3,038

503,864


76,252
23,084
114,833

214,170

47,284

166,886
-----------
670,750


7,156
112,604

119,760


$ 1,168,780 550,990

$ 1,270,764 670,750


11,680
27,215
1,251,248
7,925

1,298,067


99,786
57,725
214,463

371,975

77,049

294,927

1,592,994


21,553
131,582

153,135

1,439,859

1,592,994


==II==II===-=5.==--t==-LI--===--ll==~rr=