Horniman Horticultural Case
Background
Horniman Horticulture is a wholesale nursery company, which was purchased by the browns couples from Maggie’s father at $999,000. The nursery’s operations filled 52 greenhouses and 40 acres of productive fields and employed 12 full-time and 15 seasonal employees. Sales were primarily to retail nurseries throughout the mid-Atlantic region. The company specialized in such woody shrubs as azaleas, camellias, hydrangeas, and rhododen-drons, but also grew and sold a wide variety of annuals, perennials, and trees. Since the business relies on good weather conditions, it takes the plants years to grow. Bad weather can destroy the inventory.
Bob ran the nursery’s operations, while Maggie oversaw its finances. Over the previous two years, Bob had increased the number of plant species grown at the nursery by more than 40%. Spontaneously, the growth of the business over the previous three years was really considerable. The profit margin increased from 3.1% in 2003 to 5.8% in 2005. The average revenue growth was (2.42+12.46+15.48)/3=10.12%, with a 15% growth ahead of 2004. Besides, Bob’s warm personality won him affections from all of the customers and employees.
There were some promising development plans in the near future.
1) Bob was going to shift product mix to the mature plants line, as nurseries are willing to pay premium prices for plants that delivered ”instant landscape”.
2) Considering the long-term-growth opportunities, Bob decided to close a
purchase of a neighboring 12-acre parcel of farmland at $75,000.
3) 2006 would be a banner year, with the expected revenue hitting a record 30% growth rate.
Financial Performance Analysis
First of all, from Exhibit 1, the balance sheet of Horniman Horticulture, there is a significant increase in revenue from 2002 to 2005, (1048.8-788.5)/788.5=33.01%. The cost increased slowly, which is 25% for four years. SG&A expense, Depreciation cost as well as the tax expense of the firm kept relatively
Horniman Horticulture is a wholesale nursery company, which was purchased by the browns couples from Maggie’s father at $999,000. The nursery’s operations filled 52 greenhouses and 40 acres of productive fields and employed 12 full-time and 15 seasonal employees. Sales were primarily to retail nurseries throughout the mid-Atlantic region. The company specialized in such woody shrubs as azaleas, camellias, hydrangeas, and rhododen-drons, but also grew and sold a wide variety of annuals, perennials, and trees. Since the business relies on good weather conditions, it takes the plants years to grow. Bad weather can destroy the inventory.
Bob ran the nursery’s operations, while Maggie oversaw its finances. Over the previous two years, Bob had increased the number of plant species grown at the nursery by more than 40%. Spontaneously, the growth of the business over the previous three years was really considerable. The profit margin increased from 3.1% in 2003 to 5.8% in 2005. The average revenue growth was (2.42+12.46+15.48)/3=10.12%, with a 15% growth ahead of 2004. Besides, Bob’s warm personality won him affections from all of the customers and employees.
There were some promising development plans in the near future.
1) Bob was going to shift product mix to the mature plants line, as nurseries are willing to pay premium prices for plants that delivered ”instant landscape”.
2) Considering the long-term-growth opportunities, Bob decided to close a
purchase of a neighboring 12-acre parcel of farmland at $75,000.
3) 2006 would be a banner year, with the expected revenue hitting a record 30% growth rate.
Financial Performance Analysis
First of all, from Exhibit 1, the balance sheet of Horniman Horticulture, there is a significant increase in revenue from 2002 to 2005, (1048.8-788.5)/788.5=33.01%. The cost increased slowly, which is 25% for four years. SG&A expense, Depreciation cost as well as the tax expense of the firm kept relatively