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					      User Guide to the Internet-Based System for Financial Benchmark Analysis of Wholesale
                               Ornamental Plant Nursery Operations
              by Alan W. Hodges, University of Florida/IFAS, Food & Resource Economics Department
                 PO Box 110240, Gainesville, FL 32611; tel 352-392-1881 x312;
                                                November 3, 2004

        This document describes an internet-based system for financial benchmark analysis of wholesale nursery
operations. The system was developed to assist wholesale nursery growers and allied professionals to evaluate the
performance of a business in relation to industry standards. Benchmark analysis involves development of key
performance indicators that reflect basic practices in a specific type of business and region, which enables
managers to identify the strengths and weaknesses of a company, in order to establish goals for improvement, and
to capitalize on its advantages. Ideally, benchmarks should be representative of industry-leading firms as a model
for emulation, but may also include statistical information on variability of benchmark measures.
        The internet-based system, available at, consists of security
encrypted data entry forms, an analytical report generator, a historical database of firm records, and an website user
interface. The report generator and data entry forms operate using Active Server Page (ASP) scripts, and the
database operates in Microsoft Access.
        The analytical approach used in this system follows from the University of Florida’s longstanding Nursery
Business Analysis Program1. Industry benchmark values were developed from financial statements and production
records collected from over 300 grower firms in Florida between 1990 and 1998. Benchmark measures provided in
the internet-based system include indicators for productivity, profitability, financial solvency and liquidity.
Analysis reports generated by the system consist of a series of tables and charts that report the following
information for up to three industry groups and an individual firm for comparison:
$       Basic Business Information: annual plant sales, value of production, production area, number of
        employees, assets owned (plant inventory, land, buildings, equipment), leased capital.
$       Productivity and Efficiency Indicators: sales and value produced per square foot (acre), and per employee,
        plant inventory and capital turnover, capital managed per acre and per employee.
$       Annual Operating Expenses: reported for 6 major categories, labor, supplies, equipment & facilities,
        administrative overhead, capital, management, and for 26 individual expense items.
$       Cost Analysis: direct and indirect costs per square foot, costs per unit sales, cost per unit value produced in
        major expense categories.
$       Income Statement: gross income, net firm income, net margin, rate of return on invested capital and rate of
        return to equity.
$       Statement of Financial Position: current and long term assets liabilities, net worth.
$       Financial Ratios: debt/assets, current ratio, leverage, quick ratio.
$       Monthly Sales (charted).

            Hodges, A.W., L.N. Satterthwaite and J.J. Haydu, 2000. Business Analysis of Ornamental Plant
Nurseries in Florida, 1998. Economic Information Report EIR 00-05, University of Florida, Food & Resource
Economics Department. Available at
        The system offers a menu of standard reports that summarize benchmark information for firms in the
historical database, including reports for various nursery commodities, and time series. Currently, reports are
available for tropical foliage growers in Central Florida and in South Florida, container-grown woody ornamentals,
field-grown woody ornamentals, and flowering plant nurseries. Reports will be added for cut foliage growers in
Florida. Within each commodity, information is also available for subgroups of large, small, and highly profitable
firms. Large firms are defined as those having annual sales of two million dollars or greater, while small firms had
sales of less than $250,000. Highly profitable firms had a rate of return on invested capital of 15 percent or greater.
Time series reports allow users to view reports for any given industry group or firm in three separate periods.
        Authorized users of the system who have registered with the Florida Nurserymen and Growers Association
are assigned a username and password to enable access to the system for entry of information and customized
analyses. A security encryption system prevents unauthorized access to confidential information. Users enter their
financial and other data into forms and submit the information for analysis. Any number of individual firm-year
records may be entered and saved by a user. Information required for the analysis includes:
$       Income: monthly plant sales, brokered sales (finished product purchased and resold), other miscellaneous
        business income
$       Owned assets: investment cost and accumulated depreciation on buildings/ installations and
        machinery/equipment; land, plant inventory, production supplies, cash on hand, accounts receivables
        (fiscal year beginning and ending values).
$       Liabilities: current and long-term (beginning and end of year).
$       Leased assets: land, buildings, equipment, stated at current market value (beginning and end of year).
$       Production area (sq.ft.): total area, net usable growing space, stock plant space (amounts in use at
        beginning and end of fiscal year)
$       Labor hours or fulltime employee equivalents for all employees and management.
$       Operating expenses: management salaries, employee wages & benefits, plants, soil, containers, fertilizer,
        chemicals, packaging, other supplies, facility repairs & maintenance, equipment operations, insurance,
        utilities, communications, taxes, advertising, interest, depreciation, miscellaneous other.

        Nursery industry professionals can use benchmark analysis as a guide for important decisions such as
business expansions, financing, marketing strategies, operations planning, and product selection. Business analysis
also supports the rigorous evaluation of profitability for individual products. Conducting a business analysis
repeatedly over time enables managers to see trends in performance. Some outcomes that are supported by
business analysis include increased business profitability, reducing the risk of business failure, expanded
opportunities for market development and firm growth, better control of costs, greater availability of capital
financing, greater employee productivity and job satisfaction, greater physical efficiency, enhanced management
professionalism, and better product mix selection. Some common problems and opportunities for improvement
revealed by business analysis include:
       Low output, (below average sales, area),
       Overcapitalization or undercapitalization (capital managed per acre, per employee),
       Poor pricing or low value of production (low value per square foot),
       Slow crop growth (low inventory turnover),
       High costs for labor, materials or overhead due to low productivity, waste or overuse (cost per unit value
        produced, per unit area, or as share of total budget),
       Poor cash flow (low cash assets, high accounts receivable, low inventory turnover),
       Imbalanced debt structure (ratio of current to long term liabilities).

                               Standard Report Layout and Notes on Calculations
Table 1–Overall Business Operations
A. Plant Sales
B. Less Sales of Brokered Plants
C. Nursery-produced Plant Sales (line A-C)
D. Change in Inventory Value
E. Total Value of Production (line C+D)
H. Space for Finishing & Propagation (usable growing space net of isles, roads, service areas)
I. Space for Stock Plants
J. Growing Space, sq.ft (line H+I)
K. Growing Space, acres
L. Nursery Area, acres
M. Full-time Equivalent Persons (number @ 2080 Hrs/year)
Capital Owned
N. Growing Plants
O. Buildings & Improvements
P. Machinery & Equipment
Q. Land.
R. Supply Inventory
S. Accounts Receivable
T. Cash on Hand
U. Total Owned Capital
Capital Leased
V. Bldgs, Improvements
W. Machinery & Equipment
X. Land
Y. Total Leased Capital
Z. Total Capital Managed (Owned plus Leased)

Table 2–Productivity and Efficiency Indicators
Sales Per Sq.ft. Growing Space (Table 1, C/J)
Production Per Sq.ft. Growing Space (Table 1, E/J)
Sales Per Acre Growing Area (Table 1, C/K)
Production Per Acre Growing Area (Table 1, E/K)
Sales Per Person (Table 1, C/M)
Production Per Person (Table 1, E/M)
Growing Area per Person (Table 1, J/M)
Persons Per Acre Growing Area (Table 1, M/K)
Plant Inventory Turnover (Table 1, C/N)
Owned Capital Turnover (Table 1, C/U)
Managed Capital Turnover (Table 1, C/Z)
Capital Managed Per Person (Table 1, Z/M)
Capital Managed Per Acre (Table 1, Z/K)
Table 3–Operating Expenses
A. Labor (Employee Wages & Benefits)
B. Supplies Total
        Plants & Seeds
        Heating Fuel
        Peat & Soil
        Fertilizers & Lime
        Pesticides & Chemicals
        Packaging & Shipping Supplies
        Other Production Supplies
        Supply Shrinkage
C. Facility & Equipment Costs Total
        Facility Repairs & Maintenance
        Equipment Operation
D. Direct Costs Total (A + B + C)
E. Administrative & Overhead Costs Total
        Taxes & Licenses
        Other Cash Costs
F. Capital Costs Total
        Depreciation (Mach/equipment & Buildings/fixtures)
        Interest Costs
G. Management's Compensation
H. Indirect Costs Total (E + F + G)
I. All Costs Total (D + I)

Table 4–Cost Analysis
Costs Per Square Foot Growing Area
        Direct Costs (Table 3, line D / Table 1, line J)
        Indirect Costs (Table 3, line H / Table 1, line J)
        Total Costs (Table 3, line I / Table 1, line J)
Costs as Share of Nursery Sales
        Direct Costs (Table 3, Line D / Table 1, line C)
        Indirect Costs (Table 3, Line H / Table 1, line C)
        Total Costs (Table 3, Line I / Table 1, line C)
Costs as Share of Total Value Produced
        Labor (Table 3, line A / Table 1, line E)
        Supplies (Table 3, line B / Table 1, line E)
        Facility & Equipment (Table 3, line C / Table 1, line E)
        Total Direct Costs (Table 3, line D / Table 1, line E)
        Administrative and Overhead (Table 3, line E / Table 1, line E)
        Capital Costs (Table 3, line F / Table 1, line E)
        Management's Compensation (Table 3, line G / Table 1, line E)
        Total Indirect Costs (Table 3, line H / Table 1, line E)
        Total Costs (Table 3, line I / Table 1, line E)

Table 5–Income Statement
A. Nursery Sales (Table 1, line C)
B. Change in Plant Inventory Value (ending value - beginning value)
C. Increase in Supply Inventory (ending value - beginning value)
D. Miscellaneous Cash Income
E. Total Income (A+B+C+D)
F. Less Direct Costs (Table 3, line D)
G. Gross Income (E-F)
H. Gross Margin (G / E)
I. Less Administrative/Overhead & Depreciation Costs (Table 3, line E, + Depreciation)
J. Net Nursery Income (H - I)
K. Less Management's Compensation (Table 3, line G)
L. Return to Capital (J-K)
M. Net Profit Margin (L / E)
N. Rate of Return on Capital Investment (M / Table 6, line L)
O. Less Interest Costs (Table 3, line F-interest)
P. Return on Net Worth (L - O)
Q. Rate of Return on Net Worth (P / Table 6, line P)

Table 6–Statement of Financial Position
Current Assets
A. Cash on Hand
B. Accounts Receivable
C. Plant Inventory Value
D. Supply Inventory Value
E. Total Current Assets
Long Term Assets (at Cost Value)
F. Machinery & Equipment
G. Buildings & Fixtures
H. Land
I. Total Original Cost of Long-term Assets (F + G + H)
J. Accumulated Depreciation
K. Total Long Term Assets at Cost Values (I - J)
L. Total Assets (E + K)
M. Current Liabilities
N. Long Term Liabilities
O. Total Liabilities
P. Net Worth
Q. Total Liabilities & Net Worth

Table 7–Financial Ratios
Cash on Hand / Current Liabilities (Table 6, A/M)
Accounts Receivable / Sales (Table 6, B/C)
Current Value / Original Cost Long Term Assets (Table 6, K/I)
Quick Ratio (Table 6, (A+B)/M)
Current Liabilities / Long Term Liabilities (Table 6, M/N)
Total Assets/total Liabilities (Table 6, L/O)
Leverage (Table 6, L/Q)

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