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Group Title: Agricultural Economics report 33
Title: Business analysis of five wholesale garden supply firms in Florida for the fiscal year 1969-70
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Permanent Link: http://ufdc.ufl.edu/UF00027473/00001
 Material Information
Title: Business analysis of five wholesale garden supply firms in Florida for the fiscal year 1969-70
Physical Description: i, 9 leaves : ; 28 cm.
Language: English
Creator: Rosenberger, Stanley E
Publisher: Dept. of Agricultural Economics, University of Florida
Place of Publication: Gainesville Fla
Publication Date: 1972
 Subjects
Subject: Gardening equipment industry -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: Stanley E. Rosenberger.
General Note: Cover title.
General Note: "March 1972."
Funding: Florida Historical Agriculture and Rural Life
General Note: Agricultural economics report - University of Florida ; 28
 Record Information
Bibliographic ID: UF00027473
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 - 001615900
oclc - 21028166
notis - AHP0345

Table of Contents
    Copyright
        Copyright
    Title Page
        Page i
    Table of Contents
        Page ii
    Introduction
        Page 1
    Purpose
        Page 2
    Methodology
        Page 2
    Analysis
        Page 2
        Page 3
        Page 4
    Tables
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
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





1 March 1972 Ag. Econ. Report 33



Business Analysis Of Five Wholesale
Garden Supply Firms In Florida

For The Fiscal Year 1969-70









ad9





Department of Agricultural Economics L
Florida Cooperative Extension Service i
Institute of Food and Agricultural Sciences
University of Florida, Gainesville MAY ,0 9 iJ 3
/ .F.A.S. Univ. of Florida
.: [_


Stanley E. Rosenberger






TABLE OF CONTENTS


Page


INTRODUCTION . . . . . .

PURPOSE . . .. . . . .

METHODOLOGY . . . . . .

ANALYSIS . . . . . . .





LIST OF TABLES


TABLE


1 Analysis of operating statements from five wholesale
garden supply businesses in Florida for the fiscal
year 1969-70 . . . . .

2 Direct variable expenses for sales, warehousing, and
delivery from five wholesale garden supply businesses
in Florida for the fiscal year 1969-70 . .

3 Analysis of balance sheets from five wholesale garden
supply businesses in Florida for the fiscal year
1969-70 . . . . . .

4 Analysis of measurements of efficiency from five
wholesale garden supply businesses in Florida for
the fiscal year 1969-70 . . . .

5 Analysis of sales distribution by months from five
wholesale garden supply businesses in Florida for the
fiscal year 1969-70 . . . .







BUSINESS ANALYSIS OF FIVE WHOLESALE GARDEN
SUPPLY FIRMS IN FLORIDA FOR THE FISCAL YEAR 1969-70*


Stanley E. Rosenberger


INTRODUCTION


The wholesale garden supply industry in Florida is relatively new.

Most of the businesses that distribute garden supplies formerly special-

ized in other lines such as seed, farm supplies, feed, fertilizer, etc.

Even now few of the firms handle garden supplies exclusively since they

are still in a period of transition or diversification. However, many

of these businesses have reached a point where garden supply products

now constitute well over one half of total sales volume and the share of

sales continues to increase annually.

Those businesses that handle wholesale garden supplies are inter-

ested in learning more about the nature of competition and the typical

costs of doing business. It is the purpose of this study to help pro-

vide timely information on the operational performance of bus esseses

specializing in the wholesale distribution of garden supplies.

The term garden supplies, as used by the wholesale trade, refers to

home owner sizes or amounts of such items as pesticides, plant foods,

soil additives, mulching materials, hand tools, pet items, irrigation




*Credit for making this study possible is due the Florida Seedsmen
and Garden Supply Association. Appreciation is also extended to Miss
Carol May for handling the mathematical calculations and to Mrs. Kathy
Gamble and Mrs. Joy Kirkland for handling the layout and typing.


Stanley E. Rosenberger is professor, Food and Resource Economics
Department, University of Florida.







equipment, spray or dust applicators, fertilizer spreaders, wild bird

seed, lawn and garden seed, patio or lawn furniture and equipment used

for outdoor decorations, plant pots or containers, and small power

equipment. Nursery plants and green goods are not usually handled by

garden supply wholesalers.


PURPOSE

The business analysis of wholesale garden supply firms was under-

taken in order to develop basic data on the economic characteristics of

firms within the industry. It also was important to isolate the domi-

nate characteristics of t1\most successful distributors so that a guide

could be provided to other operators on how they may change management

practices to upgrade performance.


METHODOLOGY

Financial statements and other key operating information relating

to sales distribution were obtained from five businesses for the 1969-70

fiscal year. Data from each firm were converted to a common base and

evaluated for strong and weak areas. The common base for operating

statement information and monthly sales distribution was percent of net

sales. The common base for balance sheet information was percent of

tangible assets. The respective information for each of the firms was

then averaged for the entire group. The two most profitable businesses

were separated from the group and averaged. Likewise, the two least

profitable businesses were separated from the group and averaged.


ANALYSIS

The contrast between the most profitable and least profitable

businesses deserves particular attention. Some of the differences







equipment, spray or dust applicators, fertilizer spreaders, wild bird

seed, lawn and garden seed, patio or lawn furniture and equipment used

for outdoor decorations, plant pots or containers, and small power

equipment. Nursery plants and green goods are not usually handled by

garden supply wholesalers.


PURPOSE

The business analysis of wholesale garden supply firms was under-

taken in order to develop basic data on the economic characteristics of

firms within the industry. It also was important to isolate the domi-

nate characteristics of t1\most successful distributors so that a guide

could be provided to other operators on how they may change management

practices to upgrade performance.


METHODOLOGY

Financial statements and other key operating information relating

to sales distribution were obtained from five businesses for the 1969-70

fiscal year. Data from each firm were converted to a common base and

evaluated for strong and weak areas. The common base for operating

statement information and monthly sales distribution was percent of net

sales. The common base for balance sheet information was percent of

tangible assets. The respective information for each of the firms was

then averaged for the entire group. The two most profitable businesses

were separated from the group and averaged. Likewise, the two least

profitable businesses were separated from the group and averaged.


ANALYSIS

The contrast between the most profitable and least profitable

businesses deserves particular attention. Some of the differences







equipment, spray or dust applicators, fertilizer spreaders, wild bird

seed, lawn and garden seed, patio or lawn furniture and equipment used

for outdoor decorations, plant pots or containers, and small power

equipment. Nursery plants and green goods are not usually handled by

garden supply wholesalers.


PURPOSE

The business analysis of wholesale garden supply firms was under-

taken in order to develop basic data on the economic characteristics of

firms within the industry. It also was important to isolate the domi-

nate characteristics of t1\most successful distributors so that a guide

could be provided to other operators on how they may change management

practices to upgrade performance.


METHODOLOGY

Financial statements and other key operating information relating

to sales distribution were obtained from five businesses for the 1969-70

fiscal year. Data from each firm were converted to a common base and

evaluated for strong and weak areas. The common base for operating

statement information and monthly sales distribution was percent of net

sales. The common base for balance sheet information was percent of

tangible assets. The respective information for each of the firms was

then averaged for the entire group. The two most profitable businesses

were separated from the group and averaged. Likewise, the two least

profitable businesses were separated from the group and averaged.


ANALYSIS

The contrast between the most profitable and least profitable

businesses deserves particular attention. Some of the differences







between these two groups carry meaningful and significant considerations

for managers of wholesale garden supply businesses in their decision-

making capacities. For example, what are the conditions that allow a

1.9 percent sales difference in "gross margin" but only .3 percent sales

difference in "expenses"? Why does one group produce "other income" at

a ratio three times the level of that in the other group? What is the

significance of the most profitable group having a 1:1 ratio between lia-

bilities and net worth and the other group having a 3.5:1 ratio?

Each of the wholesale garden supply businesses included in this

study maintains salesmen on the road, delivery services, customer credit

and a warehouse for receiving, storing, selecting and shipping merchan-

dise. Each business operates from only one distribution center.

The overall annual sales volume of the five wholesale garden supply

businesses represented in this study was approximately $8.5 million in

1969-70. Annual sales volume for garden supplies at wholesale for the

entire State of Florida is not available.

Three other garden supply wholesale businesses also are operating

in Florida; two of these are multi-distribution center operations with

warehouses in more than one city. It is believed by some that the five

firms in this study represent over 50 percent of the sales volume of

wholesale garden supply businesses in Florida.

This study is not intended to be representative of the entire

industry in Florida since no random selection of firms was made for the

analysis. It should be used only as an indication of how some of the

firms within the industry perform.

Table 1 contains the operating statement analysis. Table 2 presents

detailed information on direct variable expenses for sales, warehousing







and delivery. Table 3 is the analysis of balance sheet items. Table 4

has select measures of efficiency and financial relationship between the

operating statement and the balance sheet. Monthly distribution of

sales for the year are found in Table 4.







Table 1.--Analysis of operating statements from five wholesale garden
supply businesses in Florida for the fiscal year 1969-70


Average Averages of
Item of 5 busi- Your 2 most 2 least
nesses store profitable profitable

----------------- Dollars -----------------

Net sales 1,661,000 2,302,000 1,639,000

------------ P-rPent- of --------------


Annual sales
Cost of goods sold
Gross margin
Expenses:
Payroll
Supplies (including gas
and oil)
Rent (or equivalent)c
Taxes and licenses
Advertising
Insurance
Bad debts
Utilities
Telephone
Depreciation
Travel and entertainment
Services purchased
Professional services
Miscellaneous (including
repairs and maintenance)
Interest (actual)d
Total expenses
Operating net profit
Other income
Net profit before income taxes


100.0 100.0 100.0
78.6 76.7
21.4 23.3


11.7

1.8
1.2
.7
.6
.6
.3
.1
.4
.7
.5
.6
.4

.5
.3
20.4


12.9


1.7
1.3
.7
.5
.7
.3
.1
.3
.7
.7
.1
.6


.4
.4
21.4


100.0
78.6
21.4


10.9

2.5
1.0
.8
.6
.7
.5
.2
.5
.9
.9
.6
.4

.3
.3
21.1


1.0 1.9 .3
.8 .1.4 .5
1.8 3.3 .8


aNet receipts from all merchandise
usual course of business.


sold and services rendered in the


bInvoice price on delivered-to-warehouse basis.

CActual cost of real estate used. If property was owned, the costs
were converted to rent equivalent.

dActual cost of borrowed capital.

eCash discounts, commissions on sales tax, interest earned, sales of
fixed assets, collection of bad.debts written off, etc. that are in
addition to gross margin.








Table 2.--Direct variable expenses for sales, warehousing and deliv-
ery from five wholesale garden supply businesses in Florida
for the fiscal year 1969-70


Average Averages of
Item of 5 busi- Your 2 most 2 least
nesses store profitable profitable

------------ Percent of sales -----------
Direct variable sales
expenses
Personnel 2.5 3.4 1.5
Car .3 .5 .3
Travel .3 '. .3 .4
Total 3.1 4.2 2.2

Direct variable warehousing
expenses
Personnel 3.0 2.8 3.7
Supplies .3 .3 .4
Total 3.3 3.1 4.1

Direct variable delivery
expenses
Personnel 1.5 1.9 1.4
Truck 1.7 1.2 2.3
Total 3.2 3.1 3.7







Table 3.--Analysis of balance sheets from five wholesale garden supply
businesses in Florida for the fiscal year 1969-70


Average Averages of
Item of 5 busi- Your 2 most 2 least
nesses store profitable profitable
----------------- Dollars -----------------

Tangible assets 559,945 854,595 492,058

Assets ------------ Percent of assets ------------
Current assets
Cash _2.5 1.9 2.5
Accounts receivable 35.1 37.7 30.2
Inventory 51.0 43.3 57.6
Prepaid items 1.4 .8 2.1
Total current assets 90.0 83.7 92.4
Fixed assets
Fixtures and equipmenta 2.6 2.9 2.5
Cars and trucks 2.6 3.0 3.6
Leasehold improvement a 1.5 3.8 .0
Total, fixed assets 6.7 9.7 6.1
Other assets 3.3 6.6 1.5
Total assets 100.0 100.0 100.0 100.0
Liabilities and net worth -- Percent of liabilities and net worth ---
Current liabilities
Notes payable 10.0 7.4 17.5
Accounts payable 46.1 34.5 49.0
Accrued expenses 4.6 4.3 6.2
Reserves for taxes 2.2 2.2 2.7
Total current liab. 62.9 48.4 75.4
Fixed liabilities 1.3 1.1. 2.3
Total liabilities 64.2 49.5 77.7
Net worth 35.8 50.5 22.3
Total liabilities
and net worth 100.0 100.0 100.0 100.0

aDepreciated value.

bIf the business owned real estate, it was removed from the balance
sheet for the purpose of analysis and comparison. Real estate assets
and real estate mortgage liabilities were considered as though they
were owned by outsiders. A rent equivalent was calculated from expen-
ditures and depreciation on real estate and used in the operating
statement,







Table 4.--Analysis of measurements of efficiency of five wholesale
garden supply businesses in Florida for the fiscal year
1969-70


Average Averages of
Item of 5 busi- Your 2 most 2 least
nesses store profitable profitable

Dollars in working capitala 143,600 294,773 47,532
Working capital to tangible
assets .26 .35 .10
Current assets to current
liabilitiesc 1.40 1.62 1.12
Net sales to working capitald 11.57 7.81 34.48
Net sales to inventory 7.06 7.00 6.98
Inventory to working capital 1.64 1.12 4.94
Inventory turnover rate
(times)g 5.55 5.37 5.49
Net sales to tangible assetsh 2.97 2.69 3.33
Net profit before income taxes
percent of tangible assetsi 7.79 10.75 2.87
Net profit before income taxes
percent of working capital 30.40 31.19 29.72
Net profit before income taxes
percent of net worth 22.91 24.40 17.26

a
Subtract current liabilities from current assets.

Divide working capital by tangible assets.

CDivide total current assets by total current liabilities.

dDivide annual net sales by working capital.

eDivide annual net sales by average inventory.

Divide average inventory by working capital.

gDivide cost of goods sold by average inventory cost.

Divide annual net sales by tangible assets.

Divide annual dollar net profit before taxes by tangible assets and
multiply the answer by 100.

JDivide annual dollar net profit before taxes by working capital and
multiply the answer by 100.

kDivide annual dollar net profit before taxes by net tangible worth
and multiply the answer by 100.







Table 5.--Analysis of sales distribution by months of five wholesale
garden supply businesses in Florida for the fiscal year
1969-70


Month


January

February

March

April

May

June

July

August

September

October

November

December

Annual total


Average Averages of
of 5 busi- Your 2 most 2 least
nesses store profitable profitable

------------ Percent of sales-------------

7.7 8.8 6.5

8.3 7.4 8.9

10.7 9.5 10.6

11.7 11.4 11.8

8.9 7.9 9.3

7.5 7.9 6.9

6.4 7.9 5.8

6.2 6.8 6.3

7.9 8.2 7.5

10.4 9.7 10.9

8.2 8.4 8.8

6.1 6.1 6.7

100 0 0.0.0 100.0 100.0




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