Front Cover
        Front Cover
    Title Page
        Title Page
    Abstract
        Page i
    Table of Contents
        Page ii
        Page iii
    Introduction
        Page 1
    Procedures
        Page 2
        Page 3
    Results
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
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    Literature cited
        Page 19
    Appendix
        Page 20
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Al~n W. Hodges
Loretta N. Satterthwaite
John J. Haydu


Economic Information
S "9 1 Report El 00-5r
IARSTON SCIENCE LIBRARY


Business Analysis of Ornamental Plant
Nurseries In Florida, 1998


/ UNIVERSITY OF
SFLORIDA
Institute of Food and Agricultural Sciences
Food and Resource Economics Department
Florida Agricultural Experiment Stations
Florida Cooperative Extension Service


February 2001




















Business Analysis of Ornamental
Plant Nurseries In Florida, 1998
Alan W. Hodges, Loretta N. Satterthwaite and John J. Haydu

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

Economic Information Report 00-5r

February 2001







BUSINESS ANALYSIS OF ORNAMENTAL PLANT NURSERIES IN FLORIDA, 1998

Alan W. Hodges, Loretta N. Satterthwaite, and John J. Haydu
University of Florida

Revised February 2, 2001


ABSTRACT

Information is presented on sales, production, costs, assets and liabilities, and efficiency indicators for
37 wholesale ornamental plant nurseries in Florida in 1998. Nursery products represented among the
sampled firms included container and field-grown woody ornamentals, tropical foliage, and flowering
plants. The average firm had annual sales of nursery plants of $2.71 million (M), total income of
$2.89M, and net firm income of $548 thousand (K). Total assets averaged $5.31M, including plant
inventory, land, equipment, buildings, supplies, cash on hand, and accounts receivable; and total
liabilities were $1.57M. Firms used an average production area of 55 acres, employed 49 full-time
equivalent (FTE) persons, and managed total capital of $5.7. As a share of value produced, costs
were 34.7 percent for labor, 26.1 percent for materials, 5.0 percent for equipment/facilities, 10.0
percent for overhead, 3.8 percent for depreciation, 3.9 percent for interest, and 4.6 percent for
management. Net profit margin averaged 18.9 percent; rate of return on capital investment, 7.9
percent; and rate of return on net worth, 11.2 percent. Value produced per square foot of growing
area averaged $1.18, and value produced per FTE of labor was $58K. Growing space managed per
FTE averaged 1.13 acres. Capital managed per FTE and per acre of growing space averaged $118
and $105K, respectively. Inventory turnover averaged 0.77. Similar information is presented for large,
small, and highly profitable firms, and for different types of plants. Compared to previous results for
1990, firms in 1998 were significantly larger-sales increased 66 percent in inflation-adjusted terms,
production area increased 95 percent, employment increased 114 percent, total capital managed
increased 122 percent, net worth increased 99 percent, and net income increased 45 percent.
However, profitability and productivity were lower-net margin decreased 19 percent, rate of return
on net worth decreased 20 percent, value produced per square foot decreased 11 percent, and
inventory turnover declined 27 percent. These results confirm that profitability in the Florida nursery
plant industry has continued to decline as the industry becomes more competitive.

Note: this document was revised February, 2001 to correct errors in Tables 3 and 4 in the original
report issued in November, 2000.

KEY WORDS: business analysis, Florida, wholesale nurseries, ornamental plants, sales, costs, net
income, efficiency, resource use.


ACKNOWLEDGMENTS

This report was made possible by the owners and managers of cooperating wholesale ornamental
plant nursery firms who made available their records on a confidential basis for analysis. Assistance
was provided by University of Florida Extension Ornamental Horticulture Agents Alan Fehrman, Frank
Melton, Roger Newton, and Bill Schall. Thanks to Bill Messina and Al Wysocki for peer review of the
manuscript.









TABLE OF CONTENTS


ABSTRACT ........................................ .......... .............. i

ACKNOWLEDGMENTS ......................................................... i

LIST OF TABLES ........................................ ..................... iii

LIST O F FIG U R ES ........................................................ ..... iii

INTRODUCTION .............................................................. 1

PROCEDURES ..................................... ................... ........ 2
Information Collected and Reported ........................................... 2
Accounting Conventions .................................................... 2
Industry Groups Analyzed ............................... ................... 2

RESULTS ................................................................... 4
Income and Value Produced .................................... ............ 4
Annual Sales ................. .......... ..... ......... ........... 4
Monthly Sales ..................................................... 4
Plant Inventory Change and Value Produced ............................. 5
Total Income ....................................................... 5
Resources Used and Resource Efficiency Indicators .............................. 6
Land ..................................... .................. ...... 6
Labor ............................................................. 6
C capital M managed .................................................... 6
Growing Area Managed per Worker ..................................... 6
Capital Managed per Worker .......................................... 7
Capital M managed per Acre ............................... ............. 7
Productivity Indicators ..................................................... 8
Value Produced per Square Foot ............................. ......... 8
Value Produced per W orker ........................ .. ....... ......... 8
Plant Inventory Turnover .................................. ........... 8
Asset Turnover .......................................... .......... 9


'Operating Expenses .................................
Management Compensation ........................
Employee Wages and Benefits ....................
Supplies .......................................
Facility and Equipment .............................
Administrative and Overhead ........................
Inte rest ... .... .... ... ... .. ..... .......... ... ...
Depreciation .............................. .......
Total Costs......................................
Cost per Square Foot ..............................
Net Returns and Profitability ..............................
Net Firm Incom e ........................... .....
Return to Capital ................................
N et M argin ......................................
Rate of Return on Capital ...........................
Rate of Return on Net Worth .......................


....... .......... 10
....... .......... 10
....... .......... 10
................. 10
................. 11
. . . . . 1 1
. . . . . 1 1
. . . . . 1 1
. . . . . 1 1
. . . . . 1 1
.. ............... 14
. . . . . 14
. . . . . 14
. . . . . 14
. . . . . 14
... .............. 14








Assets, Liabilities and Net W orth ............................................. 16
A sse ts . . . . . . . . . . . . . . 16
Liabilities ......................................................... 16
Net W north ........................................ .. .......... 16
Financial Ratios ................................ ........... .... ......... 18
Quick Ratio ..................................................... 18
Leverage ....................................................... 18

LITERATUR E C ITED ........................................................... 19

APPENDIX: University of Florida Nursery Business Analysis Worksheet ................... 20


LIST OF TABLES

Table 1. Number of Florida ornamental plant nursery firms sampled, 1998. .................... 3
Table 2. Income and value produced for Florida ornamental plant nurseries, 1998. ............ 5
Table 3. Resources utilized and resource efficiency indicators for Florida ornamental plant nurseries,
1998. ................................................................. 7
Table 4. Productivity indicators for Florida ornamental plant nurseries, 1998. ................. 9
Table 5. Operating expenses for Florida ornamental plant nurseries, 1998. ................. 12
Table 6. Cost efficiency indicators for Florida ornamental plant nurseries, 1998. .............. 13
Table 7. Net income and profitability indicators for Florida ornamental plant nurseries, 1998. ..... 15
Table 8. Assets, liabilities and net worth for Florida ornamental plant nurseries, 1998. ......... 17
Table 9. Financial ratios for Florida ornamental plant nurseries, 1998. ................... .. 18



LIST OF FIGURES

Figure 1. Florida grower cash receipts for greenhouse and nursery crops, 1989-1998 .......... 1
Figure 2. Average annual sales by 12 Florida nurseries, 1990, 1995, 1998. ................... 4
Figure 3. Monthly sales as a percentage of annual sales for Florida nurseries, 1998. ............ 4
Figure 4. Production area of 12 Florida nurseries, 1990, 1995, 1998. ........................ 6
Figure 5. Fulltime equivalent workers employed by 12 Florida nurseries, 1990, 1995, 1998. ...... 6
Figure 6. Total capital managed by 12 Florida nurseries, 1990, 1995, 1998. .................. 6
Figure 7. Value produced per square foot by 12 Florida nurseries, 1990, 1995, 1998. ........... 8
Figure 8. Inventory turnover for 12 Florida nurseries, 1990, 1995, 1998. ................... .. 8
Figure 9. Cost per dollar value produced by 12 Florida nurseries, 1990, 1995, 1998. ........... 10
Figure 10. Net firm income for 12 Florida nurseries, 1990, 1995, 1998. .................. .. 14
Figure 11. Net margin for 12 Florida nurseries, 1990, 1995, 1998. ......................... 14
Figure 12. Rate of return on net worth for 12 Florida nurseries, 1990, 1995, 1998. ............ 14
Figure 13. Net worth of 12 Florida nurseries, 1990, 1995, 1998. ........................... 16
Figure 14. Financial leverage for 12 Florida nurseries, 1990, 1995, 1998. ................... 18








BUSINESS ANALYSIS OF ORNAMENTAL PLANT NURSERIES IN FLORIDA, 1998

Alan W. Hodges, Loretta N. Satterthwaite, and John J. Haydu'



INTRODUCTION

The state of Florida is the second largest producer of ornamental plants in the United States,
with over 5,000 registered wholesale growers (DPI, 1998), and wholesale cash receipts of $1.28
billion in 1998 (Johnson, 1999). Ornamental plants produced in Florida include woody ornamentals
(landscape trees and shrubs), tropical foliage, flowering plant products, cut foliage, and turfgrass sod.
Florida dominates production of tropical foliage with about 90 percent of U.S. sales.


Growth of the ornamental plant industry in
Florida has mirrored that in the nation as a
whole, with sales of ornamental plant
products rapidly increasing in the 1970s
and early 1980s and then experiencing
slower growth in the latter 1980s. In the
1990s, sales of Florida greenhouse and
nursery crops declined in real terms until
1993, then increased until 1996, and held
steady since (Figure 1). During this period
of maturation and increasing competition,
the ornamental horticulture industry
experienced problems common to other
parts of U.S. agriculture, including over-
production, depressed prices, reduced
profitability, and increased business
failures.


Figure 1. Florida grower cash receipts for greenhouse
and nursery crops, 1989-1998.


1.30

1.25

b 1.20

S1.15

1.10

1.05


1.00 I I -
89 90 91 92 93 94 95


96 97 98


Information in this report was collected as Values in constant 1998 dollars, GDP price deflator
part of the University of Florida Nursery Source USDA, FLO-1999
Business Analysis Program. Since the
1960s, this program has gathered
confidential production and accounting records from wholesale nurseries in Florida. This report
updates previous reports for 1995 (Hodges, Satterthwaite, and Haydu, 1997) and 1990 (Hodges,
1992).











Alan W. Hodges, Economic Analyst, University of Florida, Department of Food and Resource Economics, PO Box
110240, Gainesville, FL 32611, voice 352-392-1881 x312, fax 352-392-3646, email hodqes(@fred.ifas.ufl.edu;
Loretta N. Satterthwaite, senior statistician, and John J. Haydu, extension economist, University of Florida, Mid-
Florida Research and Education Center, Apopka, FL, voice 407-884-2034.








PROCEDURES


Information Collected and Reported. Information for this report was collected from 37 wholesale
ornamental nursery firms in Florida for the 1998 fiscal year. Data were also analyzed for 12 of these
same firms that previously provided information for 1990 and 1995, respectively. In most cases, the
data represented a calendar year period of January to December, however, in a few instances, up to
six months data were for a prior year. Firms participated in the Nursery Business Analysis Program
voluntarily, so it is not a statistically representative sample of firms, however, it is believed to
represent firms with above-average management quality by virtue of their willingness to participate in
such quality improvement programs. Managers who participated in this program received a report
with information similar to that presented in this paper. Information gathered included monthly sales,
other income, expenses itemized in 25 categories, assets and liabilities, inventory values, value of
leased property, production area, and labor hours or number of full-time persons employed.
Information was gathered from company financial statements, or income tax forms and other
production records, then transcribed to a standard worksheet (see Appendix), and then entered into
computer spreadsheets for analysis. Reported results represent weighted averages for firms in each
group, so larger firms had greater influence on the results by virtue of their greater values for sales,
expenses, etc. Trends in operating results between 1990, 1995, and 1998 were compiled for the
same set of 12 firms that provided information in all years. These results were adjusted for inflation
using the gross domestic product (GDP) implicit price deflator, which increased 20 percent between
1990 and 1998 (Slater and Strawser, 1999).

Accounting Conventions. A number of accounting conventions were adopted in order to
standardize the collection of information from different firms and to make possible consistent
comparisons among different groups and across years. Sales of resold or "brokered" plants from
other firms were deducted from total sales to give nursery-produced sales. Net returns from brokered
sales were included in "miscellaneous income." For some firms with a large proportion of brokerage
sales, a portion of fixed costs and overhead expenses were charged as nursery production expenses.
For firms with diversified operations that contributed records for two or more industry sectors,
overhead costs and asset values were allocated to each enterprise in proportion to product sales.
Plant inventories were accounted for on an accrual basis, where changes in inventory values were
added to sales to calculate total value of production and total income. Inventories were also included
among owned capital investments. Plant inventories were normally valued at wholesale market value,
based on average actual prices realized, and appropriately discounted for unfinished products. For
example, if a crop is normally grown for eight months and is aged six months at year's end, it would
be valued at 75 percent of its normal wholesale value. In the absence of detailed inventory records,
plant inventories were evaluated at 50 to 75 percent of finished wholesale value for all plants in
production. All assets and liabilities were evaluated to represent a mid-year position by averaging the
beginning and ending values for the period. Investments in buildings, site improvements, machinery,
and equipment were taken at book value, i.e. original cost less accumulated depreciation. Leased
capital assets in land, buildings, and equipment were estimated at current market value. Investments
in land were generally valued at the original purchase price, which did not reflect the current
appreciated value of landholdings for many older firms. In cases where assets were personally owned
by corporate officers and leased exclusively to the company, these assets were taken at book value
rather than market value, and debts to corporate officers were not included among company liabilities
when there was no intention to repay these debts. In some cases, lease payments for land were
taken as compensation for management.

Industry Groups Analyzed. Records were separately compiled and analyzed for five different
groups of crops and production system types in the wholesale ornamental plant nursery industry:
containerized woody ornamentals, field grown woody ornamentals, flowering plants, tropical foliage
plants in Central Florida, and tropical foliage in South Florida. Production systems for woody
ornamentals are characterized by open growing areas, while producers of tropical foliage and








flowering plant products typically have weatherized greenhouses or shadehouses. Within each
industry group, data were also analyzed by subgroups of large firms, small firms, and highly profitable
firms where possible. Large firms were defined as having annual sales of $1 million or greater, while
small firms had sales of less than $500,000. Highly profitable firms were defined as having returns to
capital of at least 15 percent. The number of firms sampled in each industry is shown in Table 1. Of
the 37 firms providing information for 1998, 12 of these firms also participated in 1990 and 1995. In
order to assure confidentiality for participating firms, results are reported separately only for those
industry groups for which three or more firms participated.

Table 1. Number of Florida ornamental plant nursery firms sampled, 1998.

Industry Group Number Firms
All firms 37
Tropical foliage, Central Florida 4
Tropical foliage, South Florida 12
Woody ornamentals, container growing 11
Woody ornamentals, field growing 7
Flowering plants 3
Large firms, $1 million or greater sales 11
Small firms, less than $500,000 sales 12
Highly profitable firms, 15% or greater return to capital 9
Same firms oarticioatina in 1990. 1995. and 1998 12








RESULTS


Results of the analysis are presented in separate sections on income and value produced, productive
resources utilized, assets and liabilities, expenses, net returns and profitability, productivity and
efficiency indicators, and financial ratios. Summary tables are presented with results for all firms,
large, small, and highly profitable firms, and for the industry groups of container woody ornamentals,
field woody ornamentals, flowering plants, and Central and South Florida tropical foliage. Information
presented in charts shows changes in key measures from 1990 to 1998, in inflation-adjusted terms,
for the 12 firms participating in both 1990 and 1998.


Income and Value Produced


Annual Sales. Plant sales by Florida nursery
firms in 1998 averaged $2.7 million (M),
including $2.4M in plants produced by the
nurseries, net of products purchased from
other growers and resold. Large firms (i.e.
those with at least $1M in sales) had sales
averaging $7.1M (Table 2). Sales were highest
for flowering plant firms ($6.3M). Sales for
Central and South Florida foliage firms
averaged $1.3 and $2.6M, respectively, and
sales by container and field growers of woody
ornamentals were $3.4M and $1.2M,
respectively. For those firms providing
information in both 1995 and 1998, average
sales have increased 74 percent higher in
constant-dollar terms (Table 2). Over the
period 1990-1998, average sales per firm
increased 99 percent (Figure 2).

Monthly Sales. The distribution of
monthly sales as a percentage of total Figure
sales is shown in Figure 3. All industry Florida
groups generally followed similar
trends, with peak sales during the 20
spring months (March-May), followed
by declining summertime sales, and
then a smaller second peak in a 15
November. Flowering plant nurseries
had dramatically more seasonal sales,
with nearly 50 percent of annual sales 10
during the spring months and less than
five percent monthly during the July-
September period. Presumably this
pattern was related to the market for 5
holiday crops. Sales were least
seasonal for container woody
ornamental nurseries. 0


Figure 2. Average annual sales by 12 Florida
nurseries, 1'990, 1995, 1998.


2.4 -

2.2 -

2.0


1.4 '
1990 1995
Values in constant 1998 dollars
UF Nursery Business Analysis Program, 12 firms


1998


S3. Monthly sales as a percentage of annual sales for
nurseries, 1998.


ALL

Container

Field

Flower

Cen. Fla. Foliage

So. Fla. Foliage


c -- -5 cn ti > U

Month


% -


% -


% -


I I I i


i i i I I I I I








Plant Inventory Change and Value Produced. Changes in plant inventory values during 1998 were
positive for all industry groups, and averaged $395K for all firms and $1.3M for the large nurseries
(Table 2). Value produced or output is a measure of productive effort of a firm, calculated as the sum
of own plant sales plus change in plant inventory value. Value produced averaged $2.8M for all firms,
ranging from $7.5M for large firms to $288K for small firms. Value produced by the same firms
increased 48 percent from 1995 to 1998, and 74 percent between 1990 and 1998.

Total Income. Total income, including plant sales, changes in plant inventory values, and
miscellaneous income from brokerage services, interest on accounts, rents, etc., averaged $2.9M for
all firms, ranging from $7.7M for large firms to $392K for small firms (Table 2). Total income for the
highly profitable firms averaged $4.7M. Total income for the sub-sample of same firms has increased
47 percent since 1995 and 79 percent since 1990.


Table 2. Income and value produced for Florida ornamental plant nurseries, 1998.
S Container Field Central South
Item All Firms Large Small Profit Woody Woody Flowering Florida Florida
Firms Firms Firms Ornamen- Ornamen- Plants Foliage Foliage
Fr talks talks
1000$
Total sales 2,709 7,057 442 3,834 3,392 1,174 6,308 1,284 2,553
Own plant sales 2,411 6,274 258 3,814 3,194 1,150 6,009 971 2,008
Change plant inventory 395 1,249 30 779 751 369 44 20 297
Value produced 2,806 7,523 288 4,593 3,945 1,518 6,053 991 2,306
Miscellaneous income 88 167 104 99 98 96 153 174 29
Total income 2,894 7,690 392 4.691 4.043 1.615 6.205 1,165 2.334








Resources Used and Resource Efficiency Indicators


Resources used for nursery plant production were land, labor, and managed capital. Indicators of
productivity, efficiency, and resource-use intensity express relationships between the use of
productive resources (nursery growing space, labor,
and capital) and monetary measures of output. Figure 4. Production area of 12 Florida
Because of characteristic differences in resource nurseries, 1990, 1995, 1998.
use, these indicators are more meaningful for
different types of nursery operation than for large or 14
small businesses.


Land. Land used for plant production was
measured as the average area in use at the
beginning and end of the year. Net usable growing
area included only space within growing beds and
fields. Space in aisles, driveways, and other service
areas were excluded. Production area averaged
54.8 acres for all firms, ranging from 146.9 acres for
large firms to 6.6 acres for small firms (Table 3).
Growing area increased 95 percent since 1990
(Figure 4). Growing area varied dramatically among
industry groups: woody container nurseries
averaged 121 acres of production area, while
Central Florida foliage nurseries averaged 4.7 acres
(Table 3).

Labor. Labor used by nurseries was measured in
terms of full-time equivalent (FTE) persons, including
production, administrative, sales, and management
personnel. In most cases, this was calculated by
dividing total labor hours by 2,080 hours per
worker-year (52 weeks at 40 hours per week). The
number of full-time equivalent persons averaged
48.6 for all firms, ranging from 121.9 for large firms
to 7.3 for small firms (Table 3). Labor used has
increased 38 percent since 1995 and 114 percent
since 1990 (Figure 5).


Capital Managed. Total capital managed included
both owned and leased assets in land, buildings,
and equipment; and working capital in inventories,
cash, and accounts receivable. Owned capital in
buildings, improvements, and equipment were
assessed at book value, while leased assets were
taken at market value. Total capital managed
averaged $5.7M for all firms, ranging from $15.7M
for large firms to $702K for small firms (Table 3).
Capital managed has increased 66 percent since
1995 and 122 percent since 1990 (Figure 6).

Growing Area Managed per Worker. The
intensity of labor use was evaluated in terms of
production area (acres) per FTE person. Growing


1990 1995
UF Nursery Business Analysis, 12 firms


1998


Figure 5. Fulltime equivalent workers
employed by 12 Florida nurseries, 1990, 1995,
1998.


I 35
S 30
25
_ 25
I


15s -
1990 1995
UF Nursery Business Analysis, 12 firms


1998


Figure 6. Total capital managed by 12 Florida
nurseries, 1990, 1995, 1998.


2.5

2 2.0

1.5


1.0 Ii
1990 1995
Values in constant 1998 dollars
UF Nursery BusinessAnalysis Program, 12 firms


1998


1


n









space per FTE averaged 1.1 for all firms, 1.2 for large firms, and 0.9 for small firms (Table 3). Highly
profitable firms had a significantly higher ratio of growing space to employees, 1.9 FTEs per acre. For
the same firms, this measure has decreased nine percent since 1990. Woody ornamental container
and field nursery firms had a much higher ratio of growing space to labor, averaging 1.9 and 1.7
acres per FTE, respectively, while foliage and flowering plant firms averaged 0.2 to 0.5 acres per FTE
(Table 3).

Capital Managed per Worker. The ratio of managed capital (owned plus leased) to number of FTE
persons employed averaged $118K for all firms, $129K for large firms, and $96K for small firms
(Table 3). Highly profitable firms had a much higher value at $140K per FTE. For the same firms, this
indicator has increased four percent since 1990. Woody ornamental container and field nurseries had
substantially higher capital-labor intensity ($158K and $140K, respectively), reflecting their greater
mechanization and investment in land and plant inventory.

Capital Managed per Acre. The ratio of capital managed to growing area (acres) averaged $105K
for all firms and varied only marginally among large and small firms ($107-106K), but was
significantly lower for highly profitable firms ($81K, Table 3). Since 1995, this measure has increased
87 percent for the same firms. Capital managed per acre was highest for Central and South Florida
foliage firms ($319K and $216K, respectively) and lowest for woody ornamental container and field
growers ($85K and $82K, respectively).

Table 3. Resources utilized and resource efficiency indicators for Florida ornamental plant nurseries,
1998.
Container Fieldentral South
Resource or Indicator Units All Firms Large Small High Profit Woody Woody Flowering Florida Florida
Firms Firms Firms Ornamen- Ornamen- Plants Foliage Foliage
tals tals
Production area Acres 54.8 146.9 6.6 111.1 121.4 44.8 37.9 4.7 20.4
Persons employed FTE* 48.6 121.9 7.3 59.4 65.6 26.3 83.2 19.0 47.3
Total capital managed 1000$ 5,736 15,702 702 9,005 10,368 3,393 4,498 1,485 4,408
Value of land managed 1000$ 833 2,067 173 1,209 1,415 650 1101 71 594
Value of machinery and 1000$ 190 484 45 255 281 113 480 50 126
equipment managed
Value of buildings and 1000$ 488 1,307 92 377 776 64 385 347 544
installations managed
Capital managed per 1000$ 118 129 96 152 158 140 54 78 93
FTE*
Capital managed peracre 1000$ 105 107 106 81 85 82 119 319 216
Area per FTE* Acres 1.1 1.2 0.9 1.9 1.9 1.7 0.5 0.2 0.4
* FTE is full time equivalent employee, or 2080 hours per year.








Productivity Indicators


Value Produced per Square Foot. The productivity of nursery space was measured by value of
production (annual sales plus inventory change) per square foot of growing space. Value of
production per square foot averaged $1.18 ($51M Figure 7. Value produced per square foot I
per acre) for all firms and for large firms, and $1.00 12 Florida nurseries, 1990, 1995, 1998.
for small firms and $0.95 for highly profitable firms
(Table 4). For the same firms, value produced per 5.0
square foot fell to a significantly lower value from
1990 to 1995, then recovered in 1998, but did not
reach the original level in inflation-adjusted terms
(Figure 7). This measure varied widely among
industry groups. Central foliage and flowering plant 4.0
nurseries had significantly higher value per square a
foot ($4.89 and $3.66, respectively) because of their
highly intensive production systems, while woody 3.5 -
container and field firms had much lower values
($0.75-0.78, respectively), and South Florida foliage 3.0_
growers were intermediate ($2.60, Table 4). Value 1990 1995 1i
produced per square foot is affected by nursery Values in constant 1998 dollars
layout and space utilization efficiency (vacancy), UF Nursery Business Analysis, 12 firms
plant growth rates and survival, and inventory
turnover.


by













)98


Value Produced per Worker. Labor productivity was measured in terms of value produced per
full-time equivalent (FTE) worker. Value per FTE worker averaged $58K over aH firms, $62K for large
firms, and $39K for small firms (Table 4). Highly profitable firms had above-average labor productivity
($77K/FTE). For the same firms, value produced per FTE has increased seven percent since 1995,
but has decreased 19 percent since 1990. Labor productivity varied among industry groups relatively
less than other resource productivity measures. Woody container and field growers had values
produced per worker of $58-60K, foliage nurseries averaged $49-52K, and flowering plant firms
averaged $73K per FTE (Table 4). Variations in labor productivity may result from differences in
investment for labor-saving equipment, labor management practices, and practices affecting crop
turnover.


Plant Inventory Turnover. This is an indicator of productivity that expresses the rate at which
inventory is replaced on an ongoing basis, calculated
as the ratio of annual sales to average inventory Figure 8. Inventory turnover for 12 Flori
value. This measure accounts for the inherent value nurseries, 1990, 1995, 1998.
of different nursery crops. It can be interpreted as the
number of "crops" per year. Inventory turnover >
averaged 0.77 for all firms, 0.74 for large firms, 0.78 1.s
for small firms, and 0.69 for highly profitable firms
(Table 4). An inventory turnover of 0.77 crops per 1 1.5
year represents an average crop growing cycle of 1.3 '
years. For the same firms, inventory turnover has 1
decreased 27 percent since 1990 (Figure 8). 1.3
Inventory turnover generally followed a pattern
among industry groups similar to that for value I 1.2
produced per square foot-high values for flowering I
plant and Central Florida foliage nurseries, lower 1 1'199o 1995
values for woody ornamental firms (Table 4). Low UF Nursery Business Analysis. 12 firms
inventory turnover is common for new and rapidly


da












1998
1998









expanding firms because of large inventories of immature plants.


Asset Turnover. This indicator is analogous to inventory turnover except that it expresses the ratio of
annual sales to total assets. Asset turnover did not differ so widely among industry groups. It
averaged 0.45 for all firms, 0.42 for large firms, 0.41 for small firms, and 0.47 for highly profitable
firms (Table 4). For the same firms, asset turnover was down 13 percent from 1990. In general, high
asset turnover is desirable, indicating greater sales per dollar of investment. Low asset turnover rates
may result from low labor or space productivity or excessive capital investment.

Table 4. Productivity indicators for Florida ornamental plant nurseries, 1998.
Container Field Central South
indicator All Firms Large Small High Profit Woody Woody Flowering Florida Florida
Firms Firms Firms Ornamen- Ornamen- Plants Foliage Foliage
talkss talks Foliage Foliage
tals tals
Value produced per square 1.18 1.18 1.00 0.95 0.75 0.78 3.66 4.89 2.60
foot ($)
Value produced per FTE* 58 62 39 77 60 58 73 52 49
(1000$)
Inventory turnover 0.77 0.74 0.78 0.69 0.61 0.43 5.26 1.33 0.73
Asset turnover 0.45 0.42 0.41 0.47 0.32 0.34 1.84 0.85 0.48
* FTE is full time equivalent employee, or 2080 hours per year.








Operating Expenses


Operating expenses by nursery firms were grouped into the categories of management
compensation, employee wages and benefits, supplies, facility and equipment, administrative
overhead, depreciation, and interest. Expenses for income taxes were not included in this analysis. A
summary of expenses is given in Table 5, and cost efficiency indicators are given in Table 6.
Analysis of expenses in relation to the value of production is a reliable measure of cost efficiency that
enables comparison of costs for different types of firms on a standardized basis. For each expense
category, expenses were divided by total value of production.

Management Compensation. Salaries and benefits paid to owners and top management averaged
$129K for all firms, ranging from $264K for large firms to $46K for small firms. Management
compensation has increased 26 percent since 1995 and 21 percent since 1990 (Table 5).
Management cost per-dollar value produced averaged 4.6 percent for all firms, 3.5 percent for large
firms, 15.9 percent for small firms, and 5.0 percent for highly profitable firms, and has decreased 42
percent since 1990 (Table 6, Figure 9). Because of economies of scale, differences in management
cost efficiency among industry groups are mostly due to differences in average size of firms.

Employee Wages and Benefits. This was the largest expense category for ornamental plant
nurseries. In addition to wages and salaries, this category included payroll taxes (social security),
workers' compensation insurance, health insurance, bonuses, and other benefits paid. Employee
expenses averaged $975K for all firms, ranging from $2.6M for large firms to $113K for small firms
(Table 5). These expenses have increased 59
percent since 1995 and 124 percent since 1990. Figure 9. Cost per dollar value produced by 12
Employee expenses averaged 34.7 percent of Florida nurseries, 1990, 1995, 1998.
value produced for all firms, 34.1 percent for 0.5 ,,_,,,.,,
large firms, and 39.2 percent for small firms -
(Table 6). Labor costs were strongly related to Labor
profitability and averaged 26.8 percent of value 0.4 -
produced for highly profitable firms. For the same ---
firms, this cost, as related to value produced, has 0.3 Overe.a
increased three percent since 1995 (Figure 9). --.
By industry group, labor costs, as a share of 8 0.2
value produced, were highest for Central Florida
foliage firms (40.4 percent) and lowest for field
woody ornamentals growers (27.6 percent). 0.1

Supplies. Direct expenses for supplies or "cost 0.0
of goods sold" included expenses for plants and Values in constant 1998 dollars
seeds, containers, peat and soil, fertilizer and UF Nursery Business Analysis, 12 firms
lime, pesticides and chemicals, packaging
materials, heating fuel, and other production supplies such as tags and small tools. Shrinkage in
supply inventories was also included in this category, but was an insignificant amount in all cases.
Expenses for materials averaged $732K for all firms, ranging from $1.9M for large firms to $146K for
small firms (Table 5). These expenses have increased 63 percent since 1990. As a share of value
produced, materials costs represented 26.1 percent for all firms, 25.2 percent for large firms, 50.7
percent for small firms, and 22.7 percent for highly profitable firms (Table 6). On this basis, materials
expenses have decreased eight percent since 1995 (Figure 9). By industry group, materials costs
were 21.5 percent of value produced for woody container firms, 16.0 percent for field nurseries, 37.1
percent for flower growers, 43.1 percent for Central Florida foliage, and 27.6 percent for South Florida
foliage.








Facility and Equipment. Repairs and maintenance for nursery facilities and equipment operating
costs (i.e. fuel) averaged $142K for all firms, ranging from $360K for large firms to $20K for small
nurseries (Table 5). These expenses have increased 105 percent since 1990. Facility and equipment
costs as a share of value produced averaged five percent for all firms (Table 6), a five percent
increase from 1990.

Administrative and Overhead. This broad category included expenses for travel and entertainment,
property insurance, telephone, electric power, advertising, property taxes and business licenses, rent,
and other cash expenses (i.e. professional services, trade association memberships, office, and
miscellaneous). Administrative and overhead expenses averaged $280K for all firms, ranging from
$727K for large firms to $46K for small firms (Table 5). These expenses have increased 34 percent
since 1990 (Figure 9). Administrative and overhead costs, as a share of value produced, averaged
10.0 percent for all firms, 9.7 percent for large firms, 16.0 percent for small firms, and 7.0 percent for
highly profitable firms (Table 6). For the same firms, these expenses have decreased 18 percent
since 1995. These costs were similar for plant industry groups.

Interest. Interest expense for borrowed capital averaged $110K for all firms, ranging from $328K for
large firms to $13K for small firms (Table 5). This expense item has increased nearly eight-fold since
1990, more than any other expense category. Interest expense, as a share of value produced,
averaged 3.9 percent for all firms, 4.4 percent for both large and small firms, and only 0.5 percent for
highly profitable firms.

Depreciation. Depreciation is a non-cash allowance, representing the decreasing value of assets in
buildings and equipment, and is a cost of business over the long term. Depreciation was generally
taken from company income tax returns and computed according to the ACRS method (3, 5, or 7
years) for equipment and straight-line or double declining balance methods (10 to 20 years) for
buildings and improvements. Depreciation expense averaged $107K for all firms, ranging from $295K
for large firms to $23K for small firms (Table 5). This expense has increased 52 percent since 1990.
Depreciation costs averaged 3.8 percent of value produced for all firms, 3.9 percent for large firms,
8.0 percent for small firms, and 2.2 percent for highly profitable firms (Table 6). For the same group of
firms, depreciation cost, as a share of value produced, decreased 21 percent from 1995.

Total Costs. Total operating costs averaged $2.5M for all firms, ranging from $6.4M for large firms
to $406K for small firms. Total costs have increased 82 percent since 1990. Total costs averaged
$3.2M for container nurseries, $1.1 M for field nurseries, $5.9M for flowering plant growers, $1.1M for
Central Florida foliage firms, and $2.2M for South Florida foliage nurseries (Table 5).

Cost per Square Foot. The cost per unit of growing space is a useful measure for estimating
individual plant growing costs or comparing cost efficiencies of different production systems. Total
costs per square foot of growing area averaged $1.04 for all firms, were much higher for small firms
($1.41) and much lower for highly profitable firms ($0.64) as shown in Table 6. For the same firms,
cost per square foot has decreased 7 percent since 1990. Cost per square foot was highest for
Central Florida foliage growers ($5.48), lower for flowering plant firms ($3.56), and lowest for woody
ornamental container firms ($0.61) and field nurseries ($0.55). These results paralleled those for
value of production per square foot and inventory turnover.










Table 5. Operating expenses for Florida ornamental plant nurseries, 1998.
Container Field Central South
Expense All Firms Large Small High Profit Woody Woody Flowering Florida Florida
Firms Firms Firms Omamen- Ornamen- Plants Foliage Foliage
tals tals

1000$


Management (operator's salary 129
and benefits)

Labor 975

Employee wages 846.1

Employee soc. sec. (FICA) 61.2

Unemployment tax 3.8

Workers' insurance 35.4

Other employee expenses 28.0

Supplies 732

Plants and seeds 263.5

Containers 132.6

Heating fuel 11.5

Growing media 90.8

Fertilizer and lime 73.0

Chemicals 58.9

Packaging 73.5

Other supplies 47.9

Facility and equipment 142

Facility repair and maintenance 55.6

Vehicle and equipment Operation 85.9

Overhead 280

Travel and entertainment 20.8

Insurance 29.6

Telephone 18.7

Electric power 14.5

Taxes and licenses 17.0

Advertising 10.5

Rent 27.9

Other expenses 141.0

Depreciation allowance 107

Interest 110


264 46 231 161 158 166 94 84


2,569 113

2,250.7 95.0

154.8 7.8

5.7 1.0

91.8 4.4

65.8 4.6

1,892 146

648.0 96.5

370.8 9.6

27.7 1.2

243.4 11.0

196.3 5.5

145.8 4.7

196.5 8.8

130.6 9.5

360 20

140.4 11.7

219.2 8.4

727 46

55.7 2.9

70.9 7.3

44.1 5.0

32.5 3.1

38.3 6.1

25.3 2.8

56.3 2.6

403.5 16.3

295 23

328 13


1,232 1,357 419

1,085.5 1,178.0 338.5

70.5 83.2 31.1

5.3 5.0 8.2

40.2 47.3 22.5

30.4 43.7 19.1

1,043 847 243

404.7 223.9 84.8

156.9 213.1 38.6

10.4 0.8 0.1

155.1 157.7 37.2

146.9 102.2 18.5

82.2 72.8 35.7

61.2 18.8 3.5

98.8 104.6 25.7

165 130 89

85.3 62.2 31.8

80.0 67.9 57.0

321 399 128

18.3 21.4 5.5

23.1 29.8 13.5

23.2 24.8 13.0

27.0 17.5 8.3

13.9 20.2 7.5

16.7 15.7 13.6

65.2 29.9 33.0

133.4 239.9 33.9

101 150 25

22 176 17

3.115 3.221 1.079


T p_ Fnne 27 4_ 58 11 2.0


2,113

1,860.2

140.7

2.5

76.9

32.8

2,246

1,076.8

392.9

31.6

198.7

243.2

106.0

184.9

29.8

545

110.6

434.4

602

26.7

21.1

31.2

43.5

27.3

9.9

36.2

406.4

156

58


400

335.7

30.1

1.0

9.8

23.6

427

201.2

36.3

17.7

21.8

30.5

34.3

65.4

10.4

33

22.1

10.5

111

4.7

19.0

8.5

9.7

4.1

1.7

18.9

44.7

37

9


854

754.6

49.0

1.5

30.3

19.0

636

221.4

80.6

20.9

56.8

49.7

56.0

139.1

25.8

118

60.9

57.2

235

33.2

44.5

16.7

9.8

21.2

7.1

24.0

78.6

127

149


5.886 1.112 2.204


Total Ex enses


2474 6435 406









Table 6. Cost efficiency indicators for Florida ornamental plant nurseries, 1998.

Container Field C
Indicator All Firms Large Small High Profit Woody Woody Flowering Floda Florida
Firms Firms Firms Ornamen- Ornamen- Plants Foliag Foliage
talks tals Foliage Foliage


Total cost per square foot ($)
Cash cost per dollar sales ($)


Management
Labor
Supplies

Facility and equipment
Overhead

Depreciation
Interest


1.04 1.01 1.41 0.64 0.61
0.94 0.93 1.44 0.78 0.91

Cost Per Dollar Value Produced ($)
0.046 0.035 0.159 0.050 0.041
0.347 0.341 0.392 0.268 0.344
0.261 0.252 0.507 0.227 0.215
0.050 0.048 0.070 0.036 0.033
0.100 0.097 0.160 0.070 0.101
0.038 0.039 0.080 0.022 0.038
0.039 0.044 0.044 0.005 0.045


0.55 3.56 5.48 2.49
0.90 0.94 1.10 0.96


0.104
0.276
0.160
0.058
0.084
0.016
0.011


0.027
0.349

0.371
0.090
0.100
0.026
0.010


0.095
0.404
0.431
0.033
0.112
0.038
0.009


0.036
0.371
0.276
0.051

0.102
0.055
0.065


0,03 0.04 0044 .00 0.05 0.10 .009 006







Net Returns and Profitability


Net Firm Income. Net firm income is the
difference between total income and total costs
less management and interest costs, and
excludes income taxes. Net income averaged
$548K for all firms, ranging from $1.5M for large
firms to $31K for small firms. Highly profitable
firms had net income averaging $1.8M (Table 7).
Net income has increased 48 percent since 1995
and 45 percent since 1990 (Figure 10).
Return to Capital. Return to capital represents
profits after management and interest expenses
are deducted from net firm income (above), giving
the net returns attributable to the capital
investment. Return to capital averaged $419K for
all firms, ranging from $1.3M for large firms to a
negative $15K for small firms (Table 7). Return to
capital has increased 60 percent since 1995 and
58 percent since 1990, in inflation-adjusted terms.
Net Margin. Net margin is the ratio between net
firm income and total income or, in other words,
the share of total income that is net income. Net
margin averaged 18.9 percent for all firms, 19.8
percent for large firms, 8.0 percent for small firms,
and 38.5 percent for highly profitable firms (Table
2). Net margin has decreased 19 percent since
1990 (Figure 11). By industry group, net margin
averaged 24.3 percent for woody container
nurseries, 42.9 percent for woody field firms, 7.8
percent for flowering plant growers, 12.7 percent
for Central Florida foliage firms, and 9.2 percent
for South Florida foliage (Table 7).
Rate of Return on Capital. Rate of return on
capital is the ratio of return to capital divided by
net asset value. Rate of return on capital averaged
7.9 percent for all firms, 8.5 percent for large firms,
minus 2.3 percent for small firms, and 19.4 percent
for highly profitable firms (Table 7). For the groups
of same firms, this measure has decreased 24
percent since 1990. These results confirm that
profitability in the nursery plant industry has
continued to decline as the industry becomes
more competitive.
Rate of Return on Net Worth. This is the most
comprehensive measure of profitability, calculated
by dividing return to capital by net worth to express
returns in relation to the net assets owned, and is
comparable to annualized yields on stocks, bonds,


Figure 10. Net firm income for 12 Florida
nurseries, 1990, 1995, 1998.


400
350 -
300 -
5 250
,.200 -
S150o
100 -
50 -
1990 1995
Values in constant 1998 dollars
UF Nursery Business Analysis, 12 firms


1998


Figure 11. Net margin for 12 Florida nurseries,
1990,1995, 1998.


1998


1990 1995
UF Nursery Business Analysis. 12 firms


Figure 12. Rate of return on net worth for 12
Florida nurseries, 1990, 1995, 1998.


-5


1990 1995
UF Nursery Business Analysis. 12 firms


1998


'~::?


\c/


2









or savings deposits. This measure takes into account the financial risk of the venture. Rate of return
on net worth averaged 11.2 percent for all firms, 12.4 percent for large firms, minus 3.8 percent for
small firms, and 20.6 percent for highly profitable firms. For the same firms, this measure has
decreased two percent since 1995 and 20 percent since 1990 (Figure 12). By industry group, rate of
return on net worth averaged 10.8 percent for woody container nurseries, 17.3 percent for woody field
firms, 15.0 percent for flowering plant growers, 5.9 percent for Central Florida foliage firms, and 6.7
percent for South Florida foliage (Table 7).

Table 7. Net income and profitability indicators for Florida ornamental plant nurseries, 1998.
Container Field
High Container Field Central South
Indicator All Firms Large Small Profit Woody Woody Flowering Florida Florida
Firms Firms Firms Ornamen- Ornamen- Plants Foliage Foliage
tals tals
Net firm income (1000$) 548 1,520 31 1,808 982 693 485 148 214
Return to capital (1000$) 419 1,255 (15) 1,577 821 536 319 53 130
Net margin 18.9% 19.8% 8.0% 38.5% 24.3% 42.9% 7.8% 12.7% 9.2%
Rate of return to capital 7.9% 8.5% -2.3% 19.4% 8.3% 15.9% 9.8% 4.6% 3.1%
Rate of return on net 11.2% 12.4% -3.8% 20.6% 10.8% 17.3% 15.0% 5.9% 6.7%
worth








Assets, Liabilities and Net Worth


Assets and liabilities were calculated, as an average of beginning and ending balance sheet figures,
to represent the mid-year financial position of firms.

Assets. Total assets averaged $5.3M for all firms, ranging from $14.8M for large firms to $624K for
small firms (Table 8). Total assets have increased 67 percent since 1995 and 109 percent since 1990
(in inflation-adjusted terms). Current assets, including cash on hand, accounts receivable, and plant
and supply inventories, averaged $4.2M for all firms. Plant inventories were the largest component of
assets, averaging $3.1M in value. Long-term assets, including investments in buildings, machinery
and land, at book value, averaged $1.1M for all firms.


Liabilities. Total liabilities averaged $1.6M for all
firms, ranging from $4.70M for large firms to $235K
for small firms. Total liabilities have increased 75
percent since1995 and 133 percent since 1990.
Current liabilities, including accounts payable and
other liabilities payable within one year, averaged
$419K for all firms; while long-term liabilities such as
notes payable and mortgages averaged $1.15M for
all firms.

Net Worth. Net worth, or equity, is the difference
between total assets and total liabilities and
represents the value of the owners' share of assets.
Net worth averaged $3.7M for all firms, ranging from
$10.1M for large firms to $389K for small firms. Net
worth has increased 99 percent since 1990 (Figure
13).


Figure 13. Net worth of 12 Florida nurseries,
1990, 1995, 1998.
2.4
2.2
2.0 -
2 2"0

I 1.68
1.4 -

1.2
1.0
0.8
1990 1995 1998
Values in constant 1998 dollars
UF Nursery Business Analysis. 12 firms









Table 8. Assets, liabilities and net worth for Florida ornamental plant nurseries, 1998.
Container Field Central South
tm Alirms Large Small High Profit Woody Woody Flowering Florida Florida
tem All Firms Firms Firms Firms Ornamen- Ornamen- Plants Folige Foliage
tals tals Foliage Foliage
1000$

Plant inventory value 3,118 8,436 331 5,518 5,217 2,645 1,142 731 2,759

Supply inventory 62 153 7 62 86 19 56 71 63
Cash and accounts 1,045 3,254 55 1,584 2,592 203 1,333 214 322
receivable
Total current assets 4,225 11,843 393 7,164 7,895 2,867 2,531 1,016 3,144
Land owned 476 1,243 96 536 995 320 68 31 343
Machinery and 171 424 45 252 273 113 280 50 125
equipment
Buildings and 440 1,275 92 180 723 64 385 49 544
installations
Total long-term 1,087 2,942 233 968 1,991 497 733 130 1,012
assets
Total assets 5,312 14,785 624 8,131 9,887 3,363 3,264 1,147 4,156
Current liabilities 419 1,235 65 219 705 94 836 130 340
Long-term liabilities 1,154 3,464 170 242 1,591 169 304 114 1,887
Total liabilities 1,573 4,699 235 461 2,296 263 1,140 244 2,227
Net worth 3,739 10.086 389 7.670 7.591 3.100 2,125 903 1,929








Financial Ratios


Financial solvency and liquidity were evaluated with two financial ratios-the quick ratio and the
leverage ratio.

Quick Ratio. The quick ratio is a measure of a firm's ability to meet short-term debts. It is calculated
by dividing cash and accounts receivable by current liabilities. Cash and accounts receivable are the
most liquid of current assets, which are usually available on short notice, but inventories are not
included in this measure because they may not be immediately salable. A value for this ratio below
1.0 would indicate an illiquid position. The quick ratio averaged 2.49 for all firms, 2.63 for large firms,
0.85 for small firms, and 7.22 for highly profitable firms (Table 9). For the same firms, the quick ratio
has increased 65 percent since 1995. Across industry groups, it was highest for woody container
growers (3.68) and lowest for South Florida foliage (0.95).

Leverage. Financial leverage is the ratio of total assets to net worth and is an indicator of long-term
solvency. Higher values indicate greater risk, with potential for both greater returns and greater
losses. The leverage ratio averaged 1.42 for all firms,
1.47 for large firms, 1.60 for small firms, and 1.06 for Figure 14. Financial leverage for 12 Florida
highly profitable firms. For the same firms, leverage nurseries, 1990, 1995, 1998.
has increased since 1990 but decreased since 1995
(Figure 14). For industry groups, leverage averaged 1.9
1.30 for woody container nurseries, 1.08 for field
nurseries, 1.54 for flowering plant firms, 1.27 for r 1.8
Central Florida foliage, and 2.15 for South Florida
foliage firms (Table 9). There was no consistent trend 1 .7
in leverage with respect to firm size or profitability.
Generally, leverage factors below 2.0 are considered
to represent a very safe financial position. The impact 1 1.6
of financial leverage on profitability can be
understood as a multiplier (leverage multiplied by the 1.5
rate of return to capital assets equals the rate of
return on net worth). Since leverage is always greater 1.4
than or equal to one, return on net worth is always 1990 1995 1998
greater than rate of return on capital assets, either UF Nursery BusinessAnalysis, 12 firms
positively or negatively.


Table 9. Financial ratios for Florida ornamental plant nurseries, 1998.
Container Field C l th
Central South
Ratio All Firms Large Small High Profit Woody Woody Flowering Florida Florida
Firms Firms Firms Ornamen- Omamen- Plants Foliage Foliage
talks tals Foliage
Quick ratio 2.49 2.63 0.85 7.22 3.68 2.17 1.59 1.65 0.95
Leverage 1.42 1.47 1.60 1.06 1.30 1.08 1.54 1.27 2.15








LITERATURE CITED


Department of Plant Industry (DPI). 1998. Certified Nursery Directory. Florida Department of
Agriculture and Consumer Services, Gainesville, FL.

Hodges, A.W., L.N. Satterthwaite, and J.J. Haydu, 1997. Business Analysis of Ornamental Plant
Nurseries in Florida, 1995. Economic Information Report EIR97-3. University of Florida Food &
Resource Economics Department, Gainesville.

Hodges, A.W. 1992. Business Analysis of Ornamental Plant Nurseries in Florida, 1990. Economic
Information Report EIR92-1r. University of Florida Food & Resource Economics Department,
Gainesville.

Johnson, D.C., 1999. Floriculture and environmental horticulture situation and outlook report, FLO-
1999. USDA, Economic Research Service, Washington, D.C.

Slater, C.M. and C.J. Strawser, 1999. Business Statistics of the United States, 5th Ed., Bernan Press,
Lanham, MD.








APPENDIX: University of Florida Nursery Business Analysis Worksheet


With information requested by this form, the University of Florida will perform an analysis of your
nursery, and provide you with a report comparing your firm with the latest averages for similar firms in
the program. This analysis will include efficiency indicators for use of land (space), labor and capital,
costs of production, net income, financial position and profitability. Your nursery information will be kept
strictly confidential, but may be used anonymously for compilation of industry averages.
First time participants should call Loretta at the number listed below to schedule a time for a
personal interview to fill out the worksheet; this will ensure that all participants use the same information
so that comparisons are valid. After the first year of participation, firms may either request assistance
or simply fill out the worksheet and submit it.


General Instructions
The data submitted should be for the most recently completed accounting year. In order to perform
a correct analysis, information must be provided for all sections of the worksheet. Or, you may submit
a financial statement, and fill in only those sections not covered by the statement (sections 4, 5 and 7,
and possibly part of section 2). You may also authorize an accountant to fill out parts of the form for
you. Please round amounts to the nearest dollar.
When completed, return this worksheet and your check to:
Loretta Satterthwaite, Senior Statistician
University of Florida, Institute of Food and Agricultural Sciences
Mid-Florida Research and Education Center
2725 S. Binion Rd., Apopka, FL 32703
tel: 407/884-2034, ext. 160; fax:407/814-6186
e-mail: LNS@gnv.ifas.ufl.edu

1 General Information

Nursery Name Fiscal Year
Owner/Contact Person Month Ended
Location/Street Address County
City Zip Telephone ( )

Type of Nursery (check most appropriate choice): tropical foliage
container-grown woody ornamentals
Sfield-grown woody ornamentals
potted flowering plant
cut flowers
Today's date


D:\Business Analysis\Nbal998\EIROO-5r.wpd February 2, 2001








2. Income
A. Total plant sales ...


Jan $
Feb $
Mar $
Qtr $


........................ ............ $
By month or quarter

Apr $ July $
May $ Aug $
June $ Sep $
Qtr $ Qtr $


Oct $
Nov $
Dec $
Qtr $


Re-sale value of plants sold (brokered) for other firms1 ........... $
Miscellaneous income (interest, windfalls, profit on brokered plants, etc.) . $


3. Fiscal Year Information


Beginning Balance


Ending Balance


A. Value of Supplies in Inventory ..............
B. Value of Plants in Inventory2 ................
C. Original Cost of Land Owned ...............
D. Current Assets, including Accounts Receivable3
E. Cash on Hand ...........................
F. Current Liabilities, including Accounts Payable ..
G. Long-Term Debt4 ........................


4. Current Market Value of Leased Property5
Beginning Balance Ending Balance

A. Current Market Value of Land Leased ........ $ $
B. Value of Machinery and Equipment Leased .... $ $
C. Value of Buildings/Installations Leased ........ $ $

This amount will be deducted from total sales to give net nursery-produced crop sales. Fill this out only if included in total sales (2A).
2 Plant inventory valued at wholesale price, adjusted for percentage of completion of crops in production. For example, if nursery has
even turnover, inventory averages 50% finished, so inventory value would be the wholesale price discounted 50%.
3 Current assets less cash on hand (item E).
4 Debt due beyond the current fiscal year, including mortgages and notes payable. Debt to officers in closely held (family) corporations
(which is more like a capital investment by the owners than a debt) normally is not included.
5 Assets leased to closely held (family) corporation by stockholders may be treated, at the participant's option, either as leased capital
(this section) or as owned capital (sections 3 and 6).


I


---








5. Production Area

Enter acreage in use at beginning and end of fiscal year for:
Beginning of Year Ending of Year

A. Total nursery area (owned & leased)6 ...........

B. Total bed and/or bench space7 ................__

C. Stock plant space ..........................

D. Average vacant space8


6. Capital Assets and Depreciation9


Original Cost Accumulated Depreciation
Depreciation this year

A. Machinery & Equipmento1 ..... $ $ $

B. Buildings & Installations11 ....... $ $ $

Total ........................ $ $_ $


7. Work Time12


Total Payroll Hours or Full-time Equivalents

A. Hourly workers ..........................

B. Non-hourly workers ......................

T o ta l . . . . . . . . .


6All area used for nursery, including roads, offices, packing sheds and parking, as well as growing areas.
7 Net growing area excluding driveways, walkways, and other non-productive space. Use the facing page as a workspace for
listing, if needed.
8 Vacant space representative of slack periods during year and vacancy between removal and restocking of plants. For example, if
average turnaround time is two weeks, this represents 3.9% vacant (2/52 weeks = .039). Growing area multiplied by average
percent vacancy equals average square feet vacant.
9A depreciation schedule or detailed balance sheet may be submitted in lieu of filling out this section. Use separate sheet to list items,
if needed.
10 Equipment used specifically for business operations. If unsure about proper category for any item, please list it on the facing page.
11 Includes land improvements, wells, irrigation, fences, paving, office furniture and office equipment, as well as buildings.
12 Enter total hours for all workers including casual labor, part-time labor, piece-work laborers, clerical, salespersons, family
members, and managerss. For non-hourly workers or in cases where records are not available, time may be estimated in terms
of full-time equivalents (2,080 hours/year; 52 weeks @ 40 hours/week).








Expenses'1

Operator's salary or time value14 .............
Employees' salaries, wages, payroll taxes, and benefits ............


production wages


FICA


others (salaried)


unemp. taxes


sales commissions


workers' comp.


health insurance


other


Plants and seeds for growing .............................
G row ing containers .....................................
Fuel for production heat ................................
Growing media (potting soil, peat, sand, bark) .. ..........
Fertilizer & lim e .......................................
Pesticides, herbicides & other chemicals ................... ...
Packing & shipping supplies .............................
Other production supplies (stakes, ties, plastic, burlap, small tools)
Facility repairs & maintenance .............................
Vehicle & equipment operating costs (including insurance & tags) ...
Travel, trade shows & entertainment .........................
Insurance (property & liability, not employee or vehicle related) ....


O. Communications (telephones, telegraph, fax, radios)


Electric pow er .......................
Taxes (property, not sales), licenses, bonds
Advertising .........................
Rent (land & buildings) ................
Interest ............................
Other (itemize below, if available) ........


bank charges ......
dues & subscriptions
freight ............
miscellaneous .....


$
$
$
$
$
$


. . $
. .. $
. . $
...... $
........ $
...... $
. . $


postage .............
professional services ..
office supplies ......
waste removal ......


13A detailed statement of expenses may be submitted in lieu of filling out this section. Best method is to go down your expense sheet
item by item and place value on worksheet where you think it best fits; that way you minimize the chance of omission.
14 This should reflect total value of compensation to owners) and/or managerss. In cases where a real salary was not paid, an
expected compensation should be estimated, based upon the owner's/manager's experience and salary for a replacement.


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