• TABLE OF CONTENTS
HIDE
 Copyright
 Title Page
 Abstract
 Acknowledgements
 Table of Contents
 List of Tables
 List of Figures
 Introduction
 Procedure
 Definitions
 Data and results
 Concluding comments






Group Title: Economic information report 232
Title: Business analysis of ornamental field nurseries in Florida, 1985
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00027236/00001
 Material Information
Title: Business analysis of ornamental field nurseries in Florida, 1985
Series Title: Economic information report
Physical Description: iii, 26 p. : ill. ; 28 cm.
Language: English
Creator: Strain, J. Robert
Hodges, Alan W ( Alan Wade ), 1959-
Publisher: Food & Resource Economics Dept., Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville
Publication Date: 1987
 Subjects
Subject: Nurseries (Horticulture) -- Economic aspects -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: J. Robert Strain, Alan W. Hodges.
General Note: Cover title.
General Note: "March 1987."
Funding: Economic information report (Gainesville, Fla.) ;
 Record Information
Bibliographic ID: UF00027236
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 001584003
oclc - 23054875
notis - AHK7944

Table of Contents
    Copyright
        Copyright
    Title Page
        Title Page
    Abstract
        Page i
    Acknowledgements
        Page i
    Table of Contents
        Page ii
    List of Tables
        Page iii
    List of Figures
        Page iii
    Introduction
        Page 1
    Procedure
        Page 1
        Page 2
    Definitions
        Page 3
    Data and results
        Page 4
        Size of business
            Page 4
            Page 5
        Rates of production
            Page 6
        Labor efficiency
            Page 7
        Efficiency in the use of capital
            Page 8
            Page 9
        Dollar costs by expense category
            Page 10
            Page 11
        Percent of total costs by expense category
            Page 12
            Page 13
        Cost per square foot of production area
            Page 14
            Page 15
        Cost per dollar of sales adjusted for inventory change
            Page 16
            Page 17
        Cost per dollar of sales
            Page 18
            Page 19
        Income summary
            Page 20
            Total gain
                Page 20
            Net nursery income
                Page 20
            Return on capital
                Page 20
                Page 21
        Balance sheet
            Page 22
            Current assets
                Page 22
            Long term assets
                Page 22
            Total assets
                Page 23
            Liabilities
                Page 23
            Net worth
                Page 24
        Total profitability model
            Page 24
            Margin management
                Page 24
            Asset management
                Page 24
            Leverage management
                Page 24
                Page 25
    Concluding comments
        Page 26
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida







J. Robert Strain
Alan W, Hodges


Economic Information
Report 232


Business Analysis of
Ornamental Field Nurseries
in Florida, 1985


Central Science
Library
JUN 08 1988
University of Florida


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


-j

j


March 1987
















ABSTRACT


Average sales, costs and returns information are presented for 9 wholesale
ornamental field nurseries in Florida for the "tax year" of 1985. Average
value of plant sales was $459,480. Cash costs including a return to the opera-
tor averaged $373,641. Non-cash costs and allowances including a 12 percent
return on investment amounted to another $185,761. When the return to the
operator and return on investment were deducted, remaining costs totaled
$375,370. After adjustments for change in plant inventory value and additions
for miscellaneous income, net nursery income averaged $178,615, and return to
capital averaged $147,074 for a 11.6 percent return on investment.

KEY WORDS: Woody ornamental field tree shrub plant nursery business analy-
sis, income, costs, investment, efficiency measures, Florida.













ACKNOWLEDGEMENTS

This report was made possible by the cooperating 9 ornamental field nursery
operators who made available their production and accounting records on a con-
fidential basis for analysis and averaging. In addition, assistance and encour-
agement were supplied by Extension Ornamental Horticultural Agents Gary
Brinen, Loretta Hodyss, DeArmand Hull, and Victor Yingst. 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


Average sales, costs and returns information are presented for 9 wholesale
ornamental field nurseries in Florida for the "tax year" of 1985. Average
value of plant sales was $459,480. Cash costs including a return to the opera-
tor averaged $373,641. Non-cash costs and allowances including a 12 percent
return on investment amounted to another $185,761. When the return to the
operator and return on investment were deducted, remaining costs totaled
$375,370. After adjustments for change in plant inventory value and additions
for miscellaneous income, net nursery income averaged $178,615, and return to
capital averaged $147,074 for a 11.6 percent return on investment.

KEY WORDS: Woody ornamental field tree shrub plant nursery business analy-
sis, income, costs, investment, efficiency measures, Florida.













ACKNOWLEDGEMENTS

This report was made possible by the cooperating 9 ornamental field nursery
operators who made available their production and accounting records on a con-
fidential basis for analysis and averaging. In addition, assistance and encour-
agement were supplied by Extension Ornamental Horticultural Agents Gary
Brinen, Loretta Hodyss, DeArmand Hull, and Victor Yingst. 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 . . . . . . . .
ACKNOWLEDGEMENTS . . . . . . .
LIST OF TABLES . . . . ... ........ iii
INTRODUCTION . . . . . . ... 1
PROCEDURE . . . . ... . .......... 1
DEFINITIONS . . . .. . . . 3
DATA AND RESULTS . . . . ... . . 4
Size of Business . . . . ... . . 4
Rates of Production . . . . ... . 6
Labor Efficiency . . . . ... . . 7
Efficiency in the Use of Capital . . . . 8
Dollar Costs by Expense Category* . . . . .10
Percent of Total Costs by Expense Category* . . ... 12
Cost Per Square Foot of Production area* . . . 14
Cost Per Dollar of Sales Adjusted for Inventory Change* ...... 16
Cost Per Dollar of Sales* . . . . . .18
Income Summary . . . . ... . ... .. 20
Total Gain . . . . ... . . .20
Net Nursery Income . . . . .. .. ... 20
Return on Capital . . . . ... .. ... 20
Balance Sheet . . . . ... . . .22
Current Assets . . ........... . ... 22
Long Term Assets . . . . ... ...... 22
Total Assets . . . . ... . . .23
Liabilities . . . . .. . . .23
Net Worth . . . . ... . . 24
Total Profitability Model . . . . . 24
Margin Management . . . . ... . 24
Asset Management . . . . .. .... 24
Leverage Management . . . . ... ..... 24
CONCLUDING COMMENTS . . . .. ... . 26

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












LIST OF.TABLES


Table Page

1 Size of business, 9 wholesale ornamental field nurseries
in Florida, 1985 . . . . . . 5

2 Rates of production, 9 wholesale ornamental field
nurseries in Florida, 1985 .. ....... .... . .. .. 6

3 Labor efficiency, 9 wholesale ornamental field nurseries
in Florida, 1985 . . . . . . .. 7

4 Efficiency in the use of capital, 9 wholesale field
container nurseries in Florida, 1985 . . . .. ... 9

5 Dollar costs by expense category, 9 wholesale ornamental field
nurseries in Florida, 1985 . .. . ... .... .. 11

6 Percent of total costs by expense category, 9 wholesale ornamental
field nurseries in Florida, 1985 .... .. . .. ... .. .13

7 Costs per square foot of production area, 9 wholesale ornamental
field nurseries in Florida, 1985 . . ... .15

8 Costs per dollar of sales adjusted for change in plant inventory,
9 wholesale ornamental field nurseries in Florida, 1985 . .. .17

9 Cost per dollar of sales (no adjustment for change in plant inventory)
9 wholesale ornamental field nurseries in Florida, 1985 ..... .19

10 Income summary, 9 wholesale ornamental field nurseries
in Florida, 1985 . . . .. 21

11 Balance sheet, 9 wholesale ornamental field nurseries
in Florida, 1985 . .... ....... ..... . 23


LIST OF FIGURES
Figure Page
1 Total profitability model, 9 wholesale ornamental field
nurseries in Florida, 1985 . . . . . 25












LIST OF.TABLES


Table Page

1 Size of business, 9 wholesale ornamental field nurseries
in Florida, 1985 . . . . . . 5

2 Rates of production, 9 wholesale ornamental field
nurseries in Florida, 1985 .. ....... .... . .. .. 6

3 Labor efficiency, 9 wholesale ornamental field nurseries
in Florida, 1985 . . . . . . .. 7

4 Efficiency in the use of capital, 9 wholesale field
container nurseries in Florida, 1985 . . . .. ... 9

5 Dollar costs by expense category, 9 wholesale ornamental field
nurseries in Florida, 1985 . .. . ... .... .. 11

6 Percent of total costs by expense category, 9 wholesale ornamental
field nurseries in Florida, 1985 .... .. . .. ... .. .13

7 Costs per square foot of production area, 9 wholesale ornamental
field nurseries in Florida, 1985 . . ... .15

8 Costs per dollar of sales adjusted for change in plant inventory,
9 wholesale ornamental field nurseries in Florida, 1985 . .. .17

9 Cost per dollar of sales (no adjustment for change in plant inventory)
9 wholesale ornamental field nurseries in Florida, 1985 ..... .19

10 Income summary, 9 wholesale ornamental field nurseries
in Florida, 1985 . . . .. 21

11 Balance sheet, 9 wholesale ornamental field nurseries
in Florida, 1985 . .... ....... ..... . 23


LIST OF FIGURES
Figure Page
1 Total profitability model, 9 wholesale ornamental field
nurseries in Florida, 1985 . . . . . 25

















BUSINESS ANALYSIS OF ORNAMENTAL FIELD NURSERIES IN FLORIDA, 1985


J. Robert Strain and Alan W. Hodges


INTRODUCTION


This publication contains information on sales, costs, returns and produc-
tion efficiency for woody ornamental field nurseries in Florida for 1985.
Other nursery business analysis publications are reports on South Florida
foliage plant nurseries, Central Florida foliage plant nurseries, and woody
ornamental container nurseries in Florida.
Purposes of the nursery business analysis series include:
1) Furnishing nursery operators with various physical and economic measures
that may be used in evaluating the efficiency of individual nurseries;
2) Supplying cooperating nursery operators with data so that they may make
more informed management decisions;
3) Providing an estimate of the input requirements and revenue potential
to individuals considering entering the wholesale plant production business;
4) and Providing Florida Extension personnel with data for conducting edu-
cational programs with nursery operators.


PROCEDURE


The information and averages presented in this report are based on data
supplied by 9 nursery operators in the form of confidential production and
accounting records. Participants in the program are voluntary, and do not
represent a statistically selected sample. In fact, the nursery operators par


J. ROBERT STRAIN is an extension economist and professor, ALAN W. HODGES is
a research assistant, both in IFAS Food and Resource Economics Department.

















BUSINESS ANALYSIS OF ORNAMENTAL FIELD NURSERIES IN FLORIDA, 1985


J. Robert Strain and Alan W. Hodges


INTRODUCTION


This publication contains information on sales, costs, returns and produc-
tion efficiency for woody ornamental field nurseries in Florida for 1985.
Other nursery business analysis publications are reports on South Florida
foliage plant nurseries, Central Florida foliage plant nurseries, and woody
ornamental container nurseries in Florida.
Purposes of the nursery business analysis series include:
1) Furnishing nursery operators with various physical and economic measures
that may be used in evaluating the efficiency of individual nurseries;
2) Supplying cooperating nursery operators with data so that they may make
more informed management decisions;
3) Providing an estimate of the input requirements and revenue potential
to individuals considering entering the wholesale plant production business;
4) and Providing Florida Extension personnel with data for conducting edu-
cational programs with nursery operators.


PROCEDURE


The information and averages presented in this report are based on data
supplied by 9 nursery operators in the form of confidential production and
accounting records. Participants in the program are voluntary, and do not
represent a statistically selected sample. In fact, the nursery operators par


J. ROBERT STRAIN is an extension economist and professor, ALAN W. HODGES is
a research assistant, both in IFAS Food and Resource Economics Department.















ticipating 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 field ornamental nursery industry.
Data were collected for the 1985 "tax year." in some cases, data were
received for a fiscal year that did not coincide with the 1985 calendar year.
Data for fiscal years ending after July 1, 1984 and before July 1, 1986 were
included with the 1985 calendar year data.
Not all nursery operators drew a regular salary from their operation. In
these instances, an estimate of the value of the time of the operator was col-
lected and used in the analysis in order to provide a more equitable basis for
comparing data. For the same reason, interest expense paid by the individual
nursery operator was excluded from the costs listed in this report. Instead,
an interest charge for the total owned investment was calculated at the rate of
12 percent per year and included as a non-cash cost.
The owned capital investment reflects the depreciated book value of build-
ings, improvements, machinery and equipment. Growing plants also are included
as a part of the owned capital investment, but at a value lower than the regu-
lar wholesale price. This is because, in a normal growing operation, most of
the plants in inventory are not of a salable size. Some will barely be start-
ed, some ready to sell, and others scattered in between. A common practice is
to value all plants, whether just started or almost finished at 50 percent of
their wholesale price if finished. However, some nursery operators use other
methods. For this report, the values received from the nursery operators were
the values used. Land included in owned capital investment was valued at the
original purchase price. While this may not represent the investment of a nur-
sery operator if he or she were to buy the land on 1985, it does represent the
investment actually involved in the operation.
The data from individual nurseries are averaged and presented in tabular
form. The tables present average values for all 9 nurseries.
Nurseries participating in the program were located in the counties of
Alachua, Collier, Dade, Lee, Leon, and Palm Beach. Nursery operators received
an analysis for their own operation shortly after they supplied their data.
Their analysis followed the same format used in this report.













DEFINITIONS


In general, the terms used in this report are thought to be self explani-
tory. However, experience indicates that some of the terms used here are less


familiar than others.


They are defined as follows, and again later where they


are used:

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

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


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


depreciation
the nursery
the value of


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:
value of own plants sold by the
is annual plant sales stated in

Total gain: the sum of plar
ies, and miscellaneous cash
year's operation, be it in the
in values of inventories.


the percentage that results from dividing the
value of capital (either owned or managed). It
terms of percent of the capital involved.

it sales, changes in plant and supply inventor-
income. It represents the total effect of the
form of cash received of in the form of change


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 oper-
ator, and for the use of the capital invested in the operation.


Return to capital: the portion of net nursery income that is 1-eft
subtracting the salary or time value of the operator. It is what the
capital earned.


after
owned


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









DATA AND RESULTS


The data in the first nine tables present various size and efficiency mea-
sures. Data in Tables 10 and 11 relate to the profitability of woody orna-
mental nurseries. In the first four tables, more than one measure of efficien-
cy could be used. The first item in each table has traditionally been present-
ed as "The one best measure." It is followed by other measures that also are
useful for certain purposes or are meaningful to many growers. Throughout the
tables in this publication, arithmetic inconsistencies from rounding may be
noted.


Size of business (Table 1)


Size of business data in Table 1 is basic. When combined with cost data in
Table 5, it provides most of the data required for developing the remaining
tables in this report.
For size of business, the one best measure selected was "Value of own
plants sold" (Table 1 item A). It was determined by subtracting the cost of
plants purchased for immediate resale from the the value of total plant sales.
In other words, this is income from the sale of the plants grown in the nur-
sery. It averaged $459,480. Adjusting sales for change in value of plant
inventory shows the value of the nursery operation in total, not just cashwise.
This gave a figure of $545,787 (Table 1 item B) which was nearly 19 percent
greater than actual sales. In other words, these nurseries grew nearly a fifth
in size during the year.
Field area in production averaged 1,305,023 square feet (Table 1C). Or to
put it another way, 29.96 acres (Table 1D).
The number of fulltime equivalent people involved in the nine ornamental
field nurseries averaged 11.58 people (Table 1E). One fulltime equivalent is
2080 payroll hours.
Capital owned (Table 1M) averaged $1,270,764. By far, the largest require-
ment for capital in field operations was growing plants.
Capital managed (Table 1U) averaged $1,505,764 which was 18 percent more
than capital owned. This difference was due entirely to the value of addi-
tional land rented.









DATA AND RESULTS


The data in the first nine tables present various size and efficiency mea-
sures. Data in Tables 10 and 11 relate to the profitability of woody orna-
mental nurseries. In the first four tables, more than one measure of efficien-
cy could be used. The first item in each table has traditionally been present-
ed as "The one best measure." It is followed by other measures that also are
useful for certain purposes or are meaningful to many growers. Throughout the
tables in this publication, arithmetic inconsistencies from rounding may be
noted.


Size of business (Table 1)


Size of business data in Table 1 is basic. When combined with cost data in
Table 5, it provides most of the data required for developing the remaining
tables in this report.
For size of business, the one best measure selected was "Value of own
plants sold" (Table 1 item A). It was determined by subtracting the cost of
plants purchased for immediate resale from the the value of total plant sales.
In other words, this is income from the sale of the plants grown in the nur-
sery. It averaged $459,480. Adjusting sales for change in value of plant
inventory shows the value of the nursery operation in total, not just cashwise.
This gave a figure of $545,787 (Table 1 item B) which was nearly 19 percent
greater than actual sales. In other words, these nurseries grew nearly a fifth
in size during the year.
Field area in production averaged 1,305,023 square feet (Table 1C). Or to
put it another way, 29.96 acres (Table 1D).
The number of fulltime equivalent people involved in the nine ornamental
field nurseries averaged 11.58 people (Table 1E). One fulltime equivalent is
2080 payroll hours.
Capital owned (Table 1M) averaged $1,270,764. By far, the largest require-
ment for capital in field operations was growing plants.
Capital managed (Table 1U) averaged $1,505,764 which was 18 percent more
than capital owned. This difference was due entirely to the value of addi-
tional land rented.









Table 1.--Size of business, 9 wholesale ornamental field nurseries in
Florida, 1985.


Item


Unit


The one best measure


A Value of own plants sold(a) $
Other useful indicators of size


Value of own plants sold
B adjusted for change in . . $
plant inventory value

C Plant production area . ... .sq ft
D Plant production area . ... .acres


Average
all 9
nurseries


Your
nursery


459,480


545,787


1,305,023
29.96


E Average fulltime equivalent employees(b)

Capital owned(c) in:
F Growing plants . . . .
G Land . . . . .
H Machinery & equipment . . .
I Buildings & improvements . . .
J Supplies . . . . .
K Accounts receivable . . .
L Cash/checkbook balance . . .
M Total owned capital . . .

Capital managed(d) in:
N Growing plants . . . .
0 Land . . . . .
P Machinery & equipment . . .
Q Buildings & improvements . . .
R Supplies . . . . .
S Accounts receivable . . .
T Cash/checkbook balance . . .
U Total managed capital . . .


number


11.58


1,053,862
45,506
51,107
41,822
15,945
36,971
25,551
1,270,764


1,053,862
280,506
51 ,107
41,822
15,945
36,971
25,551
1,505,764


(a) Value of own plants sold--is the value of total plant sales minus the
cost of plants purchased for immediate resale. The cost of plant purchased for
growing-on is not deducted.

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

(c) Capital owned--is the current value (original cost less depreciation
taken) of capital assets in the nursery operation. Related debt is not deducted
in this determination of the value of capital owned.

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















Rates of Production (Table 2)


"Value of own plants sold per square foot of area in production" (Table 1
item A divided by item C) was selected as the one best measure of nursery pro-
duction rate. The average value of own plants sold was 35.2 cents per square
foot for all 9 nurseries. When sales were adjusted for change in inventory
value (Table 1B divided by 1C), the rate increased 6.6 cents per square foot,
to 41.8.
Production rate per square foot was given preference because of the ease in
comparing it with costs per square foot as presented later. However, these data
are also shown in terms of dollars per acre in production for those who are
more accustomed to thinking in these terms.
Plant inventory values per acre in production (Table 1F divided by ID) is
another useful indicator of rate of production. This value averaged $35,177
per acre for the 9 nurseries.



Table 2.--Rates of production, 9 wholesale ornamental field nurseries
in Florida, 1985.

Average
Item Unit all 9 Your
nurseries nursery
----------------------------------------------------z~-----------------
The one best measure
Value of own plants sold per
sq ft in prod - -(Table 1A/1C) cents 35.2
Other useful indicators
Value of own plants sold per sq ft adjusted
sq ft adjusted for inventory
change - ------- -(Table 1B/1C) cents 41.8

Value of own plants sold per
acre in prod -- ---- --(Table 1A/1D) $ 15,337
--- adjusted for inventory
change - ------ --(Table 1B/1D) $ 18,218

Plant inventory value per
acre in prod -- ---- --(Table 1F/1D) $ 35,177
















Labor Efficiency (Table 3)


As will be seen later during the discussion on operation statements and
operating costs, labor is the most costly single expense item in the operation
of a field nursery. Hence, measurements of efficiency in the use of labor are
some of the most important indicators for nursery managers to study. For our
purposes, "Value of own plants sold per employee" (Table 1 item A divided by
item E) was selected as the one best measure of labor efficiency. This aver-
aged $39,683 per employee for the 9 nurseries participating in the study.
Adjusting for change in inventory value (Table 1 item B divided by item E)
increased the average to $47,137.
A second measure relates nursery space and the number of people required.
This measurement provides an indication of number of people required to run a
nursery of a given size, and conversely, an indication of amount of nursery
area that can be properly handled by one person. In our study, production area
per employee (Table IC divided by 1E) for the 9 nurseries averaged 112,708
square feet or 2.59 acres.




Table 3.--Labor efficiency, 9 wholesale ornamental field nurseries in
Florida, 1985.

Average
Item Unit all 9 Your
nurseries nursery

The one best measure
Value of own plants sold per
employee ---------- (Table 1A/1E) $ 39,683
Other useful indicators
Value of own plants sold per
employee adjusted for change
in inventory ----- -(Table 1B/1E) $ 47,137

Average area in production
per employee ----- --(Table 1C/1E) sq ft 112,708












Efficiency in Use of Capital (Table 4)


Adequate capital for the development and operation of a field nursery is a
concern of nearly every operator, be their nursery large or small. Hence, ways
of evaluating the effectiveness of the capital involved in the nursery should
be the concern of every nursery manager. A number of possibilities exist for
measuring efficiency in the use of capital. The one selected as the best
single indicator was "Annual turnover of owned capital value." This is the
percentage that results from dividing the value of own plants sold by the value
of capital owned (Table 1 item A divided by item M). Annual turnover averaged
36.2 percent. This means that sales for the year were approximately one third
of the capital invested.
Another measure relates capital utilized to people required in a nursery.
In our study, capital invested per employee (Table IM divided by 1E) averaged
$109,749 for the 9 nurseries. Capital managed per person is a more accurate
measure of the actual capital involved. Managed capital per person averaged
$130,045, over 18 percent more than capital owned per acre.
A similar measure relates capital utilized to the space in a nursery. In
our study, average capital investment per acre of nursery area (Table 1 item M
divided by item D) was $42,416 for the 9 nurseries. Again, capital managed is
a more accurate measure of the actual capital involved. Managed capital per
acre (Table 1 item U divided by item D) averaged $50,260, again over 18 per-
cent more than capital owned per acre.
The largest single requirement for capital in a field nursery is growing
plants. Growing plants represented 69.99 percent of the capital managed by the
9 nurseries (Table 1N divided by 1U). The next largest requirement for capital
was land. Managed capital invested in land (Table 10 divided by 1U) averaged
18.63 percent of the total.
Other items took relatively small proportions of managed capital. Machin-
ery and equipment (Table 1P divided by 1U) averaged 3.39 percent of the total
capital for the 9 nurseries. Buildings and installations (Table 1Q divided by
1U) averaged 2.78 percent of all capital. Supply inventories (Table 1R divided
by 1U) averaged 1.06 percent for all 9 nurseries. Accounts receivable (Table
IS divided by 1U) averaged 2.46 percent. Cash/checkbook balance (Table 1T
divided by 1U) averaged 1.70 percent of the total capital.













Table 4.--Eff;ciency in use of capital, 9 wholesale ornamental field
nurseries in Florida, 1985.

Average
Item Unit all 9 Your
nurseries nursery

The one best measure


Annual turnover(e) of owned
capital value - -(Table 1A/1M) %
Other useful indicators


Annual turnover(e) of managed
capital value - -


-(Table 1A/1U)


Per employee:
Capital owned - -(Table 1M/IE)
Capital managed - -(Table 1U/1E)

Per acre:
Capital owned - -(Table 1M/1D)
Capital managed - -(Table IU/1D)

Managed capital/employee in:
Plants - - -(Table 1N/1E)
Land - - -(Table 10/1E)
tM-chinery & equipment- -(Table 1P/IE)
aBuildings & installations -(Table 1Q/IE)
Accounts receivable - -(Table 1S/1E)

Managed capital per acre in:
Plants - - (Table 1N/ID)
Land - - - -(Table 10/1D)
Machinery & equipment- -(Table IP/ID)
Buildings & installations- -(Table 1Q/1D)
Accounts receivable - -(Table 1S/ID)

Percent of capital managed in:


Plants - - -
Land - - -
Machinery & equipment -
Buildings & installations- -
Supply inventory - -
Accounts receivable- -
Cash/checkbook balance -


-(Table
-(Table
-(Table
-(Table
-(Table
-(Table
-(Table


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


Total nursery - -(Table 1U/1U)


36.2


30.5


109,749
130,045


42,416
50,260


91,017
24,233
4,414
3,612
3,193


35,177
9,363
1,706
1,396
1,234


69.99
18.63
3.39
2.78
1.06
2.46
1.70

100.00


(e) Annual turnover of capital value--the percentage received from dividing
the value of own plants sold by the value of capital (Table 1A/1M or 1U).

















Dollar Costs by Expense Category (Table 5)


Dollar costs by expense category were obtained from the annual profit and
loss statement or tax records of the participating nurseries. The cash cost
categories were grouped into wages and salaries, production supplies, other
production costs, and administrative and overhead expense. Dollar costs should
be useful for comparing the relative magnitude of the various cost items, and
as a guide to persons interested in Florida woody ornamental container nur-
series as an investment, either as buyers, sellers or lenders.
Salaries and Wages
The salary and wage group includes operator salary or time value. For the 9
nurseries, they averaged $182,842.
Production Supplies
Production supplies include the group starting with "plants and seeds"
through "other production supplies." They averaged $112,854 for the 9 nurs-
eries.
Other Production Costs
Other production costs include "facility repairs/maintenance" and "equip-
ment operating costs." They averaged $30,654 for the 9 nurseries.
Administrative and Overhead
Administrative and overhead expenses usually cannot be assigned to any par-
ticular crop or growing activity, yet must be covered in order to remain in
business. They include the group starting with "travel/trade shows" through
"other cash expenses." They averaged $47,292 for the 9 nurseries.
Total Cash Costs
All of the above make up Total Cash Costs. They averaged $373,642 for the
9 nurseries in the study.
Non-Cash Costs
Non-cash costs include depreciation allowances, decreases in the supply in-
ventory (using supplies purchased during a previous time period), and an inter-
est charge for the use of the capital invested in the nursery. These costs av-
eraged $185,761.







11


Total All Costs
Non-Cash costs added Total Cash Costs give Tot3l All Costs. They averaged
averaged $559,403.


Table 5.--Dollar costs by expense category, 9 wholesale ornamental field nur-
series in Florida, 1985.
Average
Item all 9 Your
nurseries nursery
- Dollars---


Cash Costs
Operator's salary . .
Other wages/salaries .
Salaries and wages .
Plants & seeds to grow on .
Growing containers . .
Peat/soil/shavings, etc. .
Fertilizer/lime . .
Pesticides/other chemicals
Other production supplies .
Production supplies .


Facility repairs/maintenance .
Equipment operating costs . .
Other production costs . .
Travel/trade shows . . .
Insurance . . . .
Telephone . . . .
Electricity . . . .
Taxes/licenses/bonds . .
Advertising . . . .
Rent: land and/or buildings . .
Other cash expenses . . .
Administrative and overhead .
TOTAL CASH COSTS . .
Non-Cash Costs
Depreciation: machinery/equipment .
Depreciation: buildings/fences/wells.
Inventory decrease in supplies. .
Interest on capital, 12% . .
NON-CASH COSTS . . .


TOTAL ALL COSTS . . . . .


31,541
151,301
182,842
53,734
5,976
8,953
13,705
8,631
21,855
112,854
8,225
22,429
30,654
3,961
6,193
3,204
4,588
2,581
2,569
2,823
21,373
47,292
373,642

12,481
8,512
12,277
152,492
185,761
559,403


I













Percent of Total Cost by Expense Category (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 rela-
tionships between different sizes of nurseries. But costs as a percent of the
total are useful for this purpose. These are obtained by dividing each of the
dollar expense items in Table 5 by the corresponding "Total all costs" figure
at the bottom of the table.
Salaries and Wages
Salaries and wages (includes operator) are by far the largest single cate-
gory of expense for field nurseries. They averaged 32.69 percent of all costs
for the 9 nurseries. Owner-operators drew 5.64 percent of the total, while all
other salaries and wages made up 27.05 percent of total costs.
Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 20.7 percent for the 9 nurseries. Plants and seeds accounted
for the largest portion of production supplies. They took 9.6 percent of the
total.
Other Production Costs
Other production costs ("facility repairs" and "equipment operation") aver-
aged 5.48 percent for the 9 nurseries. Facility repairs required only 1.47
percent of all costs while equipment operation took 4.01 percent.
Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 8.45 percent
of all costs for the 9 nurseries. Insurance was the largest item in this group.
Beyond that, the overhead items were fairly evenly dispersed.
Total Cash Costs
Total cash costs represented 66.79 percent of all costs and allowances for
the 9 nurseries. Labor was the largest group, production supplies second, then
administrative and overhead, and other production costs.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") are the addi-
tional costs that need to be covered eventually, though not necessarily with
cash during this accounting period. They averaged 33.2 percent, or close to a
third of the total costs for the 9 nurseries. The majority of the non-cash









13




costs was interest allowance on the capital invested in the nursery. While
this is not cash out of the pocket, it is nevertheless a cost to be included
when figuring the costs of operating a nursery, and especially when figuring
the costs to be covered in the price of plants. Failing to cover this cost
means the operator is not making a full return on the capital in the nursery.

Table 6.--Percent of total costs by expense category, 9 wholesale ornamental
field nurseries in Florida, 1985.

Average
Item all 9 Your
nurseries nursery

- Percent -


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


Plants & seeds to grow on . .
Growing containers . .
Peat/soil/shavings, etc . .
Fertilizer/lime . . .
Pesticides/other chemicals . .
Other production supplies . .
Production supplies . .

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

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

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


TOTAL ALL COSTS . . . . .


5.64
27.05
32.7

9.61
1.07
1.60
2.45
1.54
3.91
20.17

1.47
4.01
5.48

0.71
1.11
;7
:, 42
.46
0.46
0.50
3.82
8.45
66.79


2.23
1.52
2.19
27.26
33.21

100.00













Costs Per Square Foot of Production Area (Table 7)


While expenses as a percent of total costs facilitate comparing operating
statements, they do not allow easy comparison of relative growing costs between
nurseries. But costs per square foot of growing area do. These were obtained
by dividing each of the dollar cost figures in Table 5 by the area in produc-
tion figure from Table 1C, "Plant production area." This is growing area only.
It does not include drives or roadways
Salaries and Wages
Salaries and wages (includes operator) per square foot of production area
averaged 14.01 cents for the 9 nurseries. Operator-owner cost was 2.42 cents,
while all other wages and salaries were 11.59 cents per square foot.
Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 8.65 cents. Plants and seeds amounted to 4.12 cents per
square foot. Other items in this group ranged between a half cent and a cent
except for the "other" supplies category at 1.67 cents.
Other Production Costs
Other production costs ("facility repairs" and "equipment operation") aver-
aged 2.35 cents per square foot in the 9 nurseries. The majority of this was
for equipment operation, 1.72 cents per square foot.
Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 3.62 cents per
square foot of growing area in the 9 nurseries. Interest was highest, but no
one particular item stands out as a major cost item.
Total Cash Costs
Total out-of-pocket costs per square foot of production area averaged 28.63
cents per square foot. Labor made up the largest portion, production supplies
about half the portion of labor, administrative and overhead less than half the
portion of production supplies, and then other production supplies.
Non-Cash Costs
Non-cash costs ("depreciation" through "interest on capital") amounted to
14.23 cents per square foot in the 9 nurseries. All but 2.55 cents of this was
for interest on the capital involved in the operation.















Total All Costs
Non-cash costs added to total cash costs resulted in a total for all costs
and allowances of about 43 cents (42.87 cents) per square foot in the 9 nur-
series. Non-cash costs and allowances accounted for about a third of the
total, Cash costs represented two-thirds of the all cost total.

Table 7.--Costs per square foot of production area, 9 wholesale ornamental
field nurseries in Florida, 1985.
--------- -Average
Average


I tem


all 9
nurseries


Your
nursery


- Cents -


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

Plants & seeds to grow on .
Growing containers . .
Peat/soil/shavings, etc. .
Fertilizer/lime . .
Pesticides/other chemicals
Other production supplies .
Production supplies .

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

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


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

TOTAL ALL COSTS . . .


2.42
11.59
14.01

4.12
0.46
0.69
1.05
0.66
1.67
8.65

0.63
1.72
2.35

0.30
0.47
0.25
0.35
0.20
0.20
0.22
1.64
3.62
28.63


0.96
0.65
0.94
11.68
14.23

42.87


---------------------'='
-----------------====-------------------
--------------------4================---
============-----------------------













Costs Per Dollar of Sales Adjusted for Inventory Change (Table 8)


Costs per square foot of growing area are important for comparing relative
costs between nurseries, and for estimating individual plant growing costs.
However, they do not indicate the profit potential of a nursery operation as
well as do costs per dollar of sales. Adjusting sales for changes in inventory
value shows how the business is doing in total, not just cash-wise. These fig-
ures were developed by dividing the dollar costs shown in Table 5 by the appro-
priate figure from Table 1B, "Value of own plants sold adjusted for change in
plant inventory value."
Salaries and Wages
Salaries and Wages (includes operator) averaged 33.5 cents per dollar of
sales after adjusting for changes in plant inventory. The operator-owner por-
tion was 5.8 cents per dollar; all other salaries and wages amounted to 27.7
cents per dollar of sales.
Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 20.7 cents per dollar of sales. Plants and seeds amounted to
9.9 cents per dollar of sales, containers 1.1 cents, soil 1.6 cents, fertili-
zers 2.5 cents, pesticides 1.6 cents and other production supplies 4.0 cents.
Other Production Costs
Other production costs ("facility repairs" and "equipment operation") aver-
aged 5.6 cents per dollar of adjusted sales. Over four cents was for equipment
operation, one and a half cents per dollar of sales was for facility repairs.
Administrative and Overhead
These costs ("travel" through "other cash expense") amounted to 8.7 cents
per dollar of adjusted sales. Insurance amounted to 1.1 cents per dollar.
Travel, telephone, electricity, taxes and licenses, advertising, and rent each
averaged less than a cent per dollar of sales.
Total Cash Costs
Total cash costs per dollar of adjusted sales averaged 68.5 cents. Almost
a half of this was for labor. About a third was for production supplies. Non-
Cash Costs
Non-cash costs ("depreciation" through "interest on capital") averaged 34.0
cents. All but about 6 cents per dollar of sales was for a return on the
capital involved in the operation.












Total All Costs
Total costs per dollar of adjusted sales averaged 102.5 cents.


This means


the average field nursery lacked two and a half cents per dollar of adjusted
sales of covering all cash and non-cash costs.


Table 8.--Costs per dollar of sales adjusted for change in plant inventory,
9 ornamental field nurseries in Florida, 1985.

Average
Item all 9 Your
nurseries nursery


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

Plants & seeds to grow on .
Growing containers . .
Peat/soil/shavings, etc. .
Fertilizer/lime . .
Pesticides/other chemicals
Other production supplies .
Production supplies .

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

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


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


TOTAL ALL COSTS . . . . .


- - Cents - -

5.8
27.7
33.5

9.9
1.1
1.6
2.5
1.6
4.0
20.7


1.5
4.1
5.6

0.7
1.1
0.6
0.8
0.5
0.5
0.5
3.9
8.7
68.5


2.3
1.6
2.2
27.9
34.0

102.5


~


--
















Costs Per Dollar of Sales (Table 9)


While total business position is indicated by costs per dollar of sales ad-
justed for changes in plant inventory value, bill paying ability depends upon
costs relative to cash received. These figures were developed by dividing the
dollar costs shown in Table 5 by the appropriate figure from Table IA, "Value
of own plants sold."
Salaries and Wages
Salaries and wages (includes operator) amounted to 39.8 cents per dollar of
cash received. Operator-owner cost per dollar of sales was 6.9 cents; All
other salaries and wages took 32.9 cents per dollar of cash received.
Production Supplies
Production supplies ("plants and seeds" through "other production sup-
plies") averaged 24.5 cents per dollar of cash sales. Plants and seeds
accounted for 11.7 cents of this cost, containers 1.3 cents, soil 1.9 cents,
fertilizers 3.0 cents, pesticides 1.9 cents, and other production supplies 4.7
cents.
Other Production Costs
Other production costs ("facility repairs" and "equipment operation") aver-
aged 6.7 cents per dollar of cash received. Equipment operation took the
largest portion of this, 3.8 cents.
Administrative and Overhead
These costs ("travel" through "other cash expense") averaged 10.3 cents per
dollar of cash received. Insurance cost 1.3 cents per dollar received. Except
for the "other" catch-all category, all other items in this group cost a cent
or less per dollar of sales.
Total Cash Costs
Total cash costs averaged 81.3 cents per dollar of cash received. Again,
almost half of this was for labor, and a third of it was for production sup-
plies. The next largest cost category was administrative and overhead, and the
smallest cost category was other production costs.
Non-Cash Costs
Non-cash costs averaged 40.4 cents. All but seven and a quarter cents of
this was for a return to the capital involved.









19




Total all Costs
The 9 nursery average more than covered the cash costs, but lacked 21.7
cents of covering total costs. Non-cash costs were 40.4 cents, but funds left
after paying cash costs were only 18.7 cents per dollar of sales.


Table 9.--Costs per dollar of sales (no adjustment for change in plant inven-
tory), 9 wholesale ornamental field nurseries in Florida, 1985.

Average
Item all 9 Your
nurseries nursery


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

Plants & seeds to grow on . . . .
Growing containers . . . .
Peat/soil/shavings, etc . . . .
Fertilizer/lime . . . . .
Pesticides/other chemicals . . .
Other production supplies . . . .
Production supplies . . . .

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

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

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

TOTAL ALL COSTS . . . .


- - Cents - -


6.9
32.9
39.8

11.7
1.3
1.9
3.0
1.9
4.7
24.5

1.8
4.9
6.7

0.9
1.3
0.7
1.0
0.6
0.6
0.6
4.6
10.3
81.3


2.7
1.8
2.7
33.2
121.7
121.7


===============================P====e===















Income Summary (Table 10)


This section concentrates on developing net nursery income and allocating
net nursery income 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.


Total Gain
Total gain refers to the total effect of the year's operation. It is the
sum of plant sales, changes in plant and supply inventory values, and miscella-
neous income. Miscellaneous income refers to income received from sources
other than plant sales. It includes rent income, interest income, delivery
income, packaging and shipping charges, and income from the sale of fertilizer
and supplies. Total gain for the 9 nurseries averaged $553,985.


Net Nursery Income
Net nursery income is the total return for the year for the time and man-
agerial skills of the operator plus the capital invested in the operation. To
obtain net nursery income, subtract all cash costs from Table 5 except the
operator's salary, and subtract all non-cash costs shown there except interest
on capital, from total gain. The result is net nursery income, or income for
all the time and capital investment supplied by the owner-operator. For the 9
nurseries, net nursery income averaged $178,615. This was 32 percent of the
Total Gain shown above.


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 capi-
tal. This is the earnings of the money invested in the nursery. Dividing it
by the value of capital invested gives the rate of return earned by the invest-
ment. When the owner and operator are the same person, dividing net nursery















Income Summary (Table 10)


This section concentrates on developing net nursery income and allocating
net nursery income 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.


Total Gain
Total gain refers to the total effect of the year's operation. It is the
sum of plant sales, changes in plant and supply inventory values, and miscella-
neous income. Miscellaneous income refers to income received from sources
other than plant sales. It includes rent income, interest income, delivery
income, packaging and shipping charges, and income from the sale of fertilizer
and supplies. Total gain for the 9 nurseries averaged $553,985.


Net Nursery Income
Net nursery income is the total return for the year for the time and man-
agerial skills of the operator plus the capital invested in the operation. To
obtain net nursery income, subtract all cash costs from Table 5 except the
operator's salary, and subtract all non-cash costs shown there except interest
on capital, from total gain. The result is net nursery income, or income for
all the time and capital investment supplied by the owner-operator. For the 9
nurseries, net nursery income averaged $178,615. This was 32 percent of the
Total Gain shown above.


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 capi-
tal. This is the earnings of the money invested in the nursery. Dividing it
by the value of capital invested gives the rate of return earned by the invest-
ment. When the owner and operator are the same person, dividing net nursery















Income Summary (Table 10)


This section concentrates on developing net nursery income and allocating
net nursery income 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.


Total Gain
Total gain refers to the total effect of the year's operation. It is the
sum of plant sales, changes in plant and supply inventory values, and miscella-
neous income. Miscellaneous income refers to income received from sources
other than plant sales. It includes rent income, interest income, delivery
income, packaging and shipping charges, and income from the sale of fertilizer
and supplies. Total gain for the 9 nurseries averaged $553,985.


Net Nursery Income
Net nursery income is the total return for the year for the time and man-
agerial skills of the operator plus the capital invested in the operation. To
obtain net nursery income, subtract all cash costs from Table 5 except the
operator's salary, and subtract all non-cash costs shown there except interest
on capital, from total gain. The result is net nursery income, or income for
all the time and capital investment supplied by the owner-operator. For the 9
nurseries, net nursery income averaged $178,615. This was 32 percent of the
Total Gain shown above.


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 capi-
tal. This is the earnings of the money invested in the nursery. Dividing it
by the value of capital invested gives the rate of return earned by the invest-
ment. When the owner and operator are the same person, dividing net nursery















Income Summary (Table 10)


This section concentrates on developing net nursery income and allocating
net nursery income 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.


Total Gain
Total gain refers to the total effect of the year's operation. It is the
sum of plant sales, changes in plant and supply inventory values, and miscella-
neous income. Miscellaneous income refers to income received from sources
other than plant sales. It includes rent income, interest income, delivery
income, packaging and shipping charges, and income from the sale of fertilizer
and supplies. Total gain for the 9 nurseries averaged $553,985.


Net Nursery Income
Net nursery income is the total return for the year for the time and man-
agerial skills of the operator plus the capital invested in the operation. To
obtain net nursery income, subtract all cash costs from Table 5 except the
operator's salary, and subtract all non-cash costs shown there except interest
on capital, from total gain. The result is net nursery income, or income for
all the time and capital investment supplied by the owner-operator. For the 9
nurseries, net nursery income averaged $178,615. This was 32 percent of the
Total Gain shown above.


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 capi-
tal. This is the earnings of the money invested in the nursery. Dividing it
by the value of capital invested gives the rate of return earned by the invest-
ment. When the owner and operator are the same person, dividing net nursery













income between the operator and return to capital may not seem important. But
when the owners are outside investors, then accurate division is important. In
either case, rate of return is a common indicator for evaluating an investment
or for selecting between alternative investment alternatives. Return to capital
for the 9 nurseries amounted to $147,074 for a return of 11.57 percent.




Table 10.--Income summary, 9 wholesale ornamental field nurseries in Florida,
1985.
-----------------------------------------------
Average
Item Unit all 9 Your
nurseries nursery


Value of own plants sold ........... $ 459,480
Change in plant inventory value ....... $ 86,307
Increase in supply inventory ......... $ 0
Miscellaneous cash income .......... $ 8,198
Total gain(f) . . . $ 553,985

Deduct cash costs less op salary) ...... $ ( 342,101) (
Deduct non-cash costs less int . .. $ ( 33,270) ( )
Total deductions . . .... .$ ( 375,370) (

Net nursery income(g) ........... $ 178,615
Deduct op salary or time value ........ $ ( 31,541) (

Return to capital(h) . . . $ 147,074
Rate of return to capital(i) ......... % 11.57
------------------------------------
(f) Total gain--the sum of plant sales, change in plant and supply invento-
ries, and miscellaneous income. It represents the total effect of the year's
operation, be it in the form of cash or change in inventory value.

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

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

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















Balance Sheet (Table 11)


The balance sheet figures in this section are not the usual end-of-year
data. Instead, they represent the mid-year financial situation of the firms.
They were derived as an average of year-beginning and year-end figures.


Current Assets
Current assets consist of cash, accounts receivable, and inventory values.
They are cash, or items deemed convertible to cash within a year's time. Cash
on hand includes funds in checking accounts, savings accounts, and money market
funds. Average cash on hand was $25,551. Accounts receivable include uncol-
lected payments from all sources; the majority of these are trade accounts for
plants sold. Generally, this figure should be minimized. Uncollected funds
pay no bills and earn no interest. They averaged $36,971. Inventory values are
the investments in growing plants and supplies presented previously in Table 1.
They averaged $1,069,808. Total current assets averaged $1,132,330.


Long Term Assets
Long term assets are investments in buildings, machinery and land that nor-
mally would not be converted to cash within a year. Current values of invest-
ments are the original cost less accumulated depreciation. Comparing original
cost with the value remaining after subtracting accumulated depreciation pro-
vides an idea of the degree to which capital assets have been depleted. Origi-
nal investments averaged $248,045. Subtracting accumulated depreciation of
$109,611 leaves a current value of $138,434 (55.8 percent of original cost).


Total Assets
Total assets are the sum of the current or short term assets and the long
term or fixed assets. For the 9 nurseries, total assets averaged $1,270,764.


Liabilities
Liabilities may be "current" (payable during the current year) or "long
term" (payable at some time after the current year). Current liabilities aver-
aged $11,720. Long-term Liabilities are notes or mortgages. They averaged















Balance Sheet (Table 11)


The balance sheet figures in this section are not the usual end-of-year
data. Instead, they represent the mid-year financial situation of the firms.
They were derived as an average of year-beginning and year-end figures.


Current Assets
Current assets consist of cash, accounts receivable, and inventory values.
They are cash, or items deemed convertible to cash within a year's time. Cash
on hand includes funds in checking accounts, savings accounts, and money market
funds. Average cash on hand was $25,551. Accounts receivable include uncol-
lected payments from all sources; the majority of these are trade accounts for
plants sold. Generally, this figure should be minimized. Uncollected funds
pay no bills and earn no interest. They averaged $36,971. Inventory values are
the investments in growing plants and supplies presented previously in Table 1.
They averaged $1,069,808. Total current assets averaged $1,132,330.


Long Term Assets
Long term assets are investments in buildings, machinery and land that nor-
mally would not be converted to cash within a year. Current values of invest-
ments are the original cost less accumulated depreciation. Comparing original
cost with the value remaining after subtracting accumulated depreciation pro-
vides an idea of the degree to which capital assets have been depleted. Origi-
nal investments averaged $248,045. Subtracting accumulated depreciation of
$109,611 leaves a current value of $138,434 (55.8 percent of original cost).


Total Assets
Total assets are the sum of the current or short term assets and the long
term or fixed assets. For the 9 nurseries, total assets averaged $1,270,764.


Liabilities
Liabilities may be "current" (payable during the current year) or "long
term" (payable at some time after the current year). Current liabilities aver-
aged $11,720. Long-term Liabilities are notes or mortgages. They averaged















Balance Sheet (Table 11)


The balance sheet figures in this section are not the usual end-of-year
data. Instead, they represent the mid-year financial situation of the firms.
They were derived as an average of year-beginning and year-end figures.


Current Assets
Current assets consist of cash, accounts receivable, and inventory values.
They are cash, or items deemed convertible to cash within a year's time. Cash
on hand includes funds in checking accounts, savings accounts, and money market
funds. Average cash on hand was $25,551. Accounts receivable include uncol-
lected payments from all sources; the majority of these are trade accounts for
plants sold. Generally, this figure should be minimized. Uncollected funds
pay no bills and earn no interest. They averaged $36,971. Inventory values are
the investments in growing plants and supplies presented previously in Table 1.
They averaged $1,069,808. Total current assets averaged $1,132,330.


Long Term Assets
Long term assets are investments in buildings, machinery and land that nor-
mally would not be converted to cash within a year. Current values of invest-
ments are the original cost less accumulated depreciation. Comparing original
cost with the value remaining after subtracting accumulated depreciation pro-
vides an idea of the degree to which capital assets have been depleted. Origi-
nal investments averaged $248,045. Subtracting accumulated depreciation of
$109,611 leaves a current value of $138,434 (55.8 percent of original cost).


Total Assets
Total assets are the sum of the current or short term assets and the long
term or fixed assets. For the 9 nurseries, total assets averaged $1,270,764.


Liabilities
Liabilities may be "current" (payable during the current year) or "long
term" (payable at some time after the current year). Current liabilities aver-
aged $11,720. Long-term Liabilities are notes or mortgages. They averaged









23




$90,264. Total Liabilities represent that part of the nursery that belongs to
someone else. They averaged $101,984, or 8 percent of the assets.


Net worth
Net worth is the difference between "total assets" and "total liabilities".
This is what the owner owns. The average net worth of all 39 nurseries was
$1,168,780 (92 percent of the assets).



Table 11.--Balance Sheet, 9 wholesale ornamental field nurseries in Florida,
1985

Average
Item all 9 Your
nurseries nursery

- Dollars - -
Assets
Current Assets
Cash on hand . . . . 25,551
Accounts receivable. ..... . . 36,971
Inventories: Plants . . . 1,053,863
Supplies . . . 15,945
TOTAL CURRENT ASSETS ......... ... .. 1,132,330

Long Term Assets
Machinery & equipment ............... 129,220
Buildings & fixtures ............... 73,320
Land . . . . ... 45,505
Sub-total (original cost) ........... 248,045
Less accumulated depreciation. .......... .( 109,611) (_
TOTAL LONG TERM ASSETS ............. 138,434

TOTAL ASSETS . . . . 1,270,764

Liabilities and Net worth
Liabilities
Current liabilities . . . .. 11,720
Long-term liabilities .............. 90,264
TOTAL LIABILITIES . . . 101,984

NET WORTH . . . . 1,168,780

TOTAL LIABILITIES $ NET WORTH ........... 1,270,764

-------------------------------------==









23




$90,264. Total Liabilities represent that part of the nursery that belongs to
someone else. They averaged $101,984, or 8 percent of the assets.


Net worth
Net worth is the difference between "total assets" and "total liabilities".
This is what the owner owns. The average net worth of all 39 nurseries was
$1,168,780 (92 percent of the assets).



Table 11.--Balance Sheet, 9 wholesale ornamental field nurseries in Florida,
1985

Average
Item all 9 Your
nurseries nursery

- Dollars - -
Assets
Current Assets
Cash on hand . . . . 25,551
Accounts receivable. ..... . . 36,971
Inventories: Plants . . . 1,053,863
Supplies . . . 15,945
TOTAL CURRENT ASSETS ......... ... .. 1,132,330

Long Term Assets
Machinery & equipment ............... 129,220
Buildings & fixtures ............... 73,320
Land . . . . ... 45,505
Sub-total (original cost) ........... 248,045
Less accumulated depreciation. .......... .( 109,611) (_
TOTAL LONG TERM ASSETS ............. 138,434

TOTAL ASSETS . . . . 1,270,764

Liabilities and Net worth
Liabilities
Current liabilities . . . .. 11,720
Long-term liabilities .............. 90,264
TOTAL LIABILITIES . . . 101,984

NET WORTH . . . . 1,168,780

TOTAL LIABILITIES $ NET WORTH ........... 1,270,764

-------------------------------------==














Total Profitability Model


The Total Profitability Model combines operating statement and balance
sheet figures in three sections: margin management, asset management and lever-
age management. Together, they indicate the firm's return on net worth.


Margin Management
Figures for this section come from Table 12, the Income Summary. From
nursery total gain ($553,985) are subtracted total deductions ($375,370) plus
operator's salary ($31,541) to give a return to capital of $147,074. Return to
capital divided by total gain ($553,985) yields an average net profit margin of
26.55 percent.


Asset Management
Figures for this section come from the asset portion of Table 13, the
Balance sheet. Current assets ($1,132,330) plus long term assets ($138,434)
make average total assets per nursery of $1,270,764. This divided into total
gain ($553,985) gives an asset turnover figure of 0.44. This means that all
sources of gain (sales plus changes in inventory values) represented 44 percent
of the capital involved in the nursery. Or looking at it another way, it will
take two and a quarter years for all sources of gain to equal the capital
involved in the nursery. Asset turnover times net profit margin (26.55
percent) result in an average return to capital of 11.57 percent.


Leverage Management
Figures for this section come from the liabilities and net worth portion of
Table 13, the Balance sheet. Current liabilities ($11,720) plus long term
liabilities ($90,264) gives average total liabilities for the nine nurseries of
$101,984. This subtracted from total assets ($1,270,764) yields average net
worth of $1,168,780. Total liabilities and net worth divided by net worth
gives a leverage factor of 1.09. Leverage times return to capital (11.57
percent) gives a return on net worth of 12.58 percent. This is the return to
the investment (net worth) of the owner-operator in the nursery.














Total Profitability Model


The Total Profitability Model combines operating statement and balance
sheet figures in three sections: margin management, asset management and lever-
age management. Together, they indicate the firm's return on net worth.


Margin Management
Figures for this section come from Table 12, the Income Summary. From
nursery total gain ($553,985) are subtracted total deductions ($375,370) plus
operator's salary ($31,541) to give a return to capital of $147,074. Return to
capital divided by total gain ($553,985) yields an average net profit margin of
26.55 percent.


Asset Management
Figures for this section come from the asset portion of Table 13, the
Balance sheet. Current assets ($1,132,330) plus long term assets ($138,434)
make average total assets per nursery of $1,270,764. This divided into total
gain ($553,985) gives an asset turnover figure of 0.44. This means that all
sources of gain (sales plus changes in inventory values) represented 44 percent
of the capital involved in the nursery. Or looking at it another way, it will
take two and a quarter years for all sources of gain to equal the capital
involved in the nursery. Asset turnover times net profit margin (26.55
percent) result in an average return to capital of 11.57 percent.


Leverage Management
Figures for this section come from the liabilities and net worth portion of
Table 13, the Balance sheet. Current liabilities ($11,720) plus long term
liabilities ($90,264) gives average total liabilities for the nine nurseries of
$101,984. This subtracted from total assets ($1,270,764) yields average net
worth of $1,168,780. Total liabilities and net worth divided by net worth
gives a leverage factor of 1.09. Leverage times return to capital (11.57
percent) gives a return on net worth of 12.58 percent. This is the return to
the investment (net worth) of the owner-operator in the nursery.














Total Profitability Model


The Total Profitability Model combines operating statement and balance
sheet figures in three sections: margin management, asset management and lever-
age management. Together, they indicate the firm's return on net worth.


Margin Management
Figures for this section come from Table 12, the Income Summary. From
nursery total gain ($553,985) are subtracted total deductions ($375,370) plus
operator's salary ($31,541) to give a return to capital of $147,074. Return to
capital divided by total gain ($553,985) yields an average net profit margin of
26.55 percent.


Asset Management
Figures for this section come from the asset portion of Table 13, the
Balance sheet. Current assets ($1,132,330) plus long term assets ($138,434)
make average total assets per nursery of $1,270,764. This divided into total
gain ($553,985) gives an asset turnover figure of 0.44. This means that all
sources of gain (sales plus changes in inventory values) represented 44 percent
of the capital involved in the nursery. Or looking at it another way, it will
take two and a quarter years for all sources of gain to equal the capital
involved in the nursery. Asset turnover times net profit margin (26.55
percent) result in an average return to capital of 11.57 percent.


Leverage Management
Figures for this section come from the liabilities and net worth portion of
Table 13, the Balance sheet. Current liabilities ($11,720) plus long term
liabilities ($90,264) gives average total liabilities for the nine nurseries of
$101,984. This subtracted from total assets ($1,270,764) yields average net
worth of $1,168,780. Total liabilities and net worth divided by net worth
gives a leverage factor of 1.09. Leverage times return to capital (11.57
percent) gives a return on net worth of 12.58 percent. This is the return to
the investment (net worth) of the owner-operator in the nursery.














Total Profitability Model


The Total Profitability Model combines operating statement and balance
sheet figures in three sections: margin management, asset management and lever-
age management. Together, they indicate the firm's return on net worth.


Margin Management
Figures for this section come from Table 12, the Income Summary. From
nursery total gain ($553,985) are subtracted total deductions ($375,370) plus
operator's salary ($31,541) to give a return to capital of $147,074. Return to
capital divided by total gain ($553,985) yields an average net profit margin of
26.55 percent.


Asset Management
Figures for this section come from the asset portion of Table 13, the
Balance sheet. Current assets ($1,132,330) plus long term assets ($138,434)
make average total assets per nursery of $1,270,764. This divided into total
gain ($553,985) gives an asset turnover figure of 0.44. This means that all
sources of gain (sales plus changes in inventory values) represented 44 percent
of the capital involved in the nursery. Or looking at it another way, it will
take two and a quarter years for all sources of gain to equal the capital
involved in the nursery. Asset turnover times net profit margin (26.55
percent) result in an average return to capital of 11.57 percent.


Leverage Management
Figures for this section come from the liabilities and net worth portion of
Table 13, the Balance sheet. Current liabilities ($11,720) plus long term
liabilities ($90,264) gives average total liabilities for the nine nurseries of
$101,984. This subtracted from total assets ($1,270,764) yields average net
worth of $1,168,780. Total liabilities and net worth divided by net worth
gives a leverage factor of 1.09. Leverage times return to capital (11.57
percent) gives a return on net worth of 12.58 percent. This is the return to
the investment (net worth) of the owner-operator in the nursery.














Total Profitability Model


The Total Profitability Model combines operating statement and balance
sheet figures in three sections: margin management, asset management and lever-
age management. Together, they indicate the firm's return on net worth.


Margin Management
Figures for this section come from Table 12, the Income Summary. From
nursery total gain ($553,985) are subtracted total deductions ($375,370) plus
operator's salary ($31,541) to give a return to capital of $147,074. Return to
capital divided by total gain ($553,985) yields an average net profit margin of
26.55 percent.


Asset Management
Figures for this section come from the asset portion of Table 13, the
Balance sheet. Current assets ($1,132,330) plus long term assets ($138,434)
make average total assets per nursery of $1,270,764. This divided into total
gain ($553,985) gives an asset turnover figure of 0.44. This means that all
sources of gain (sales plus changes in inventory values) represented 44 percent
of the capital involved in the nursery. Or looking at it another way, it will
take two and a quarter years for all sources of gain to equal the capital
involved in the nursery. Asset turnover times net profit margin (26.55
percent) result in an average return to capital of 11.57 percent.


Leverage Management
Figures for this section come from the liabilities and net worth portion of
Table 13, the Balance sheet. Current liabilities ($11,720) plus long term
liabilities ($90,264) gives average total liabilities for the nine nurseries of
$101,984. This subtracted from total assets ($1,270,764) yields average net
worth of $1,168,780. Total liabilities and net worth divided by net worth
gives a leverage factor of 1.09. Leverage times return to capital (11.57
percent) gives a return on net worth of 12.58 percent. This is the return to
the investment (net worth) of the owner-operator in the nursery.

















MARGIN MANAGEMENT
TOTAL GAIN


NET PROFIT
MARGIN


ASSET MANAGEMENT
CASH TOTAL GAIN


25,551- CURRENT ASSETS 553,985

+ 1,132,330
ACCOUNTS REC


36,971 TOTAL ASSETS


PLANT INVENTORY 1 97n 7~ .


LONG TERM ASSETS


ASSET TURNOVER


- 0.44


LEVERAGE MANAGEMENT TOTAL LIABILITIES
CURRENT LIABILITIES TOTAL LIABILITIES & NET WORTH


11,720t-H 101,984 M 1,270,764


RATE Of
RETURN TO
CAPITAL


RETURN ON
NET WORTH


Figure l.--Total profitability model, 9 wholesale ornamental field
nurseries in Florida, 1985















CONCLUDING COMMENTS


Nursery operators who are interested in seeing how they compare with those
participating in the Florida Nursery Business Analysis Program may calculate
their own numbers using the formulas shown and write the results on the lines
provided for this purpose on each table. Another alternative is to acquire the
University of Florida microcomputer program, 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 man-
agement decisions concerning things that affect the profitability of the
nursery operation.
Nursery operators who find this kind of information useful, but have diffi-
culty finding the time or energy to engage in the tedium of doing their own
calculation may wish to consider becoming a participant in the Florida Nursery
Business Analysis Program. If you would like to do so, contact your ornamental
agent in your nearby county Extension office, or contact the authors in Gaines-
ville. Nursery operators who authorize a commercial accounting firm to supply
the data required for the program can participate with a minimum of effort on
their part.




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