Location: Boca Raton, FL
Boca Lago Country Club is a golf course located in Florida. This workbook represents a financial analysis performed on Boca Lago. It consists of an income statement and an accompanying balance sheet, a statement of free cash flows, a projection of WACC, a good/bad scenario, and, if the “good” scenario is realized, options to expand the enterprise.
Our gross revenues over ten years are between $2.7 million and $3.8 million and represent income from membership fees, commissions from golf and tennis pros, special events fees, and sales from the pro shop, grill, and in-house dining. The expenses, like every other golf course, are high, but net income is achieved each year and will steadily grow. A 35% tax rate is assumed across the ten years.
This company is fairly leveraged with 75% of its net assets being funded with debt. The weighted average cost of capital is 11.18% and the internal rate of return, if things go well, is calculated to be 11.86%.
We believe that the probability of this golf course outperforming our current estimates is about 72%. If such improvement is realized, we would expand by developing an indoor/outdoor driving range that would target a younger audience and approach the golfing industry from a different angle.