Horniman Horticulture is a wholesale nursery business near Lynchburg, Virginia owned by Maggie and Bob. The nursery’s operations is filled with 52 greenhouses and 40 acres of productive fields and employed by 12 full-time employees and 15 seasonal employees. Sales are primarily to retail nurseries throughout the mid-Atlantic region. Throughout the first two years of business, Bob increased the number of plant species grown by more than 40%. The increase in number of plant species resulted in an increase of the profit margin from 3.1% in 2003 to an expected 5.8% in 2005. 2006 is expected to be an outstanding year for the company from the previous increase in profitability margins.
Maggie was concerned about the recent decline in the firm’s cash balance below $10,000, which was well under the company’s target of 8% annual revenue. There was also concern about how the company leveraged their debt throughout 2002-2005. Even though it was expected to be an outstanding year in 2006 for the company, there was still the possibility of not generating enough profit from the potential factors including increased interest rates, adverse weather, and a required raise in salaries for agricultural worker.
However, on the positive side, Horniman Horticulture had experienced noticeable increases in business from small nurseries. Due to the local growth of the economy, it was projected that demand for the companies products would also continue to grow. Some of these gains also had to do with Bob’s response to a growing demand for more-mature plants.
With the company’s optimistic view about the upcoming year and the ongoing strength of the local economy, it was expected to have plenty of demand to continue to continue to grow the business. 2006’s projections were revenue was expected to hit a record 30%. In addition to this, ensuring long-term-growth opportunities were ahead of Horniman with the acquisition of the additional property expecting the 2006 capital...
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