PGA PGM Level 1 Facility Management

COGS as a percentage of sales

COGS/Total Merchandise Sales = COGS as a % of sales

What is the usual business destination for long-range planning?

3-5 years plans that identify a future "destination." - include long term goals, financial forecasts

What best describes sensitivity analysis?

Entering different values for the assumptions. It allows for a planning team to evaluate how a change in one value might affect other parts of the forecast.

What is the correct budget category for labor forecasts?

Expenses (wages)

What metric should be part of every forecast regardless of the type of facility?

Golf operations revenue Revenue per round

Long range planning should initially assume an adversarial relationship between neighboring facilities that directly compete with each other.

False

Gross Margin as a percentage of sales

Gross Margin/Total Merchandise Sales = Gross Margin as a % of Sales

What should govern the decision to pursue an opportunity?

How long will these opportunities be viable?

For the purpose of developing a business plan, what is the best description of trend analysis?

It evaluates the positive and negative trends over time.

What is the most significant benefit of strategic business planning?

It provides a long-term vision/destination and does not just focus on the current state of the business.

A cash flow budget is primarily concerned with what measure?

Maintaining liquidity and allowing a facility to pay bills. It projects how much money a facility will have at the end of every month or week. Actual dollars in and out

What method do managers use to increase their knowledge of financial performance and controls?

Monitor performance by tracking budgets

Net Operating Income

Revenue - (COGS + Operating Expenses)

Financial forecasts should be based on historical data derived from a linear trend analysis.

True

Helping establish a starting point for goals, objectives, and related strategies is an appropriate use of the SWOT analysis.

True

Trends in local consumer spending would be most useful for evaluating a core business function (T / F)

True It would be classified as a Threat because the facility has no control over it yet it could affect a core business function. (think merchandise sales declining)

An important feature of a cash budget is cash flow patterns for the past 12 months are clearly indicated.

True Largely based on knowledge of the facility's past performance.

According to the Business Planning Model, a business plan should build on and refine the operational plan.

True Once objectives are established, management must align them with existing operational policies and procedures. * may have to develop new or modify existing

What is an example of a financial strategy?

increasing/decreasing fees in one or more department; borrowing money for investment purposes; reducing expenses without changes in procedures; creating packages

If the gross target margin for your golf shop were 40%, what would be the target % for your COGS?

60%

Golf shop sales of $100,000 yield a gross margin of $30,000. What is the percentage of the cost of goods?

70% Gross Margin + COGS = 100%

A capital budget is used for large-value items such as equipment and fixtures.

True

Lack of a mission statement is an example of a weakness that a SWOT analysis might disclose? (T / F)

True

Opening a new driving range 5 miles away would be a relevant factor for making assumptions about the number of rounds likely to be played in the coming year.

True

Cost of Goods Sold

beginning inventory + new purchased inventory - ending inventory

Linear Trend Formula: Percentage Change

(Last year - Previous year)/previous year = % change ex (2022-2021)/2021 = % change

What is one of the techniques used to validate assumptions?

- Scenarios and sensitivity analysis - Historical review - Expert review

What examples would be considered internal data sources for planning?

- Staffing - Course Maintenance - Types of amenities - Business marketing and promotion * Under the facility's direct control

What is one example of a performance metric?

-number of rounds -yield management -revenues per round -COGS as % of sales -gross margin as a % of sales

You are in the process of completing a business plan for the golf shop. Initial forecasts of sales, expenses and profits have been made. Past data has been analyzed and important inside and outside factors have been identified. What is the next step to be taken towards completing the plan?

1. Define the Business (assuming this has been done already as it is an existing business) 2. Assess the Current State of the Business has been done (swot) 3. Develop Business Goals, Objectives and Related Strategies (there is no mention of this so maybe this is the next step even though it doesn't follow the "order?" 4. Prepare Financial Forecasts and Budgets (this has been done). 5. Monitor performance (the plan is just being finalized so there hasn't been time to analyze anything) I guess I'd answer Develop Business Goals, Objectives, Related Strategies.

The following agenda was part of a golf range business plan: "Purchase 175dz new range balls and rotate usage three times a year. Who: Head Pro. When: End of Q1. Cost: $1500." According to the Business Planning course, describe the business plan component represented by this statement.

Action Plan: The specific steps or tasks that must be completed to execute the strategy and achieve the objectives.

What events would cause a change in the forecast for golf shop expenses?

Additional training and educational expenses. BUT, these should also increase sales revenues.

What is the most significant benefit of a point-of-sale system to a manager?

Allows for tracking

In his first year at a golf club, the head pro has made some assumptions about how improvements in customer services will increase the coming year's sales volume. What technique could be used to best test these assumptions?

Base year trend analysis

What is the definition of COGS?

Beginning inventory + newly purchased inventory - ending inventory = COGS

BASE YEAR ANALYSIS FORMULA

Comparison Year/Base Year x 100% = % Change From Base Year

What does a performance metric provide?

Important data which can be used to track budget effectiveness

What is the formula for Merchandise Net Operating Income?

Revenue - (COGS+Operating Expenses) = Net Operating Income

Revenue per Round

Revenue for a Specific Operation (for a given time period)/Total Number of Rounds (for a given time period) = Revenue per Round

What is usually broken down into categories based on product lines or shop activities?

Revenues (merchandise sales, green fees, range, etc)

How might revenues be affected at a nearby daily fee course if the local tire plant has major layoffs?

Revenues could decrease

What type of information is typically provided by qualitative data?

Data that can't be expressed as a number or a quantity of something. How and Why * conditions, enjoyment, customer satisfaction

A golf professional is purchasing a golf course. The business plan he presented to his banker included his history of successfully operating similar facilities, budget projections for the first five years under his management, and objectives and strategies for reaching his goals. The banker rejected his loan application because of missing information. What important element is missing from the business plan?

Did he ever define the business he was purchasing? Did he ever assess the current state of the business he was purchasing? Did he provide an executive summary?

A sound mission statement defines the long-term vision and core values of a facility. (T / F)

False

Changing the budget when the facility is falling short of budget projections is both unacceptable and unproductive.

False

Your finalized operating budget will show whether or not you have the money to pay. (T / F)

False A cash flow budget shows whether the facility's cash on hand is sufficient to cover immediate expenses.

A facility profile defines the overall culture of the business. (T / F)

False A vision statement helps define the culture. A facility profile is the business's assets, departments, core business areas, target markets and target customer segments.

A yield analysis is used to compile a facility's historical data on the number of rounds played.

False A yield analysis shows how many actual rounds were played verses how many rounds were available to be played.

Depreciation allowances must be accounted for in a cash flow budget.

False Accounted for in Capital Budgets

Linear trend analysis and base year analysis are examples of vertical analyses.

False Both are examples of Horizontal Analysis

A cash budget records cash and credit transactions.

False Credit purchases may result in payments at a later date. Only "when it changes hands" is key to cash flow.

Mission statements should include a definition of the facility's underlying financial model?

False Mission statements define the business purpose, not the business vision or underlying financial model.

"Develop and promote group lesson programs aimed at women and juniors" is and example of an effective business objective.

False Not SMART

A facility's financial objectives could be achieved through operational strategies alone. (T / F)

False Operational or promotional strategies should be pursued.

The SWOT analysis would treat opportunities and threats as factors that usually can be controlled by the facility.

False Opportunities and Threats are external and usually cannot be controlled by the facility.

Cost of Goods Sold is an example of qualitative data.

False Quantitative: How Much

A vision defines the shirt-term objectives that must be accomplished in the upcoming year.

False Vision is long-term (3-5 years)

Customer demographics is an internal factor.

False it is an External factor. Demographics are outside the facility's control

What information should form the basis of a golf shop's 12-month operating budget?

Figures from the annual forecast are used to realistically estimate when revenues and expenses will occur over the year.

According to the business planning course manual, what is usually the largest contributor to the bottom-line profit of the facility?

Generally payroll is the biggest expense in a golf operation.

What is the functionally significant difference between goal and objectives?

Goals are long-term Objectives are short-term

What information would be most useful to the planning team interested in measuring the facility's past or current success?

Historical data

Your employer is contemplating an increase in weekend green fees. They would like to know how this increase might affect the number of rounds played. What would provide her with the best estimate?

Historical review Looking at past performance to see how much (if any) sales volume increased/dropped after prices were increased.

What is the baseline reason for analyzing variances?

In order to monitor the plan and compare actual results against projected figures. Can occur daily, weekly, and monthly

Who should provide direction for creating the business plan at a golf operation?

Key stakeholders

You are concerned about a decline in business growth. what method would be most effective in portraying your overall financial history?

Linear Trend Analysis

What important characteristic is missing in the business objective: "increase pro shop sales next year?"

No specifics

Calculating Yield

Number of rounds in a period/Potential rounds in a period X 100 = % yield for the period

Which characteristic of goals and objectives is described as capable of being observed, recorded and measured?

Specific "Must be tied to objectives that can be observed, recorded and measured."

Linear Trend Formula: Average Percentage Change

Sum of all linear trend calculations/ the number of calculations = Average % Change ex ((%change Y1 to Y2) + (%change Y2 to Y3) + (%change Y3 to Y4))/3 (number of calculations) = Average % Change

Gross Margin

Total Merchandise Sales - COGS *Gross Margin + COGS = 100%

Assumptions are necessary for forecasting numbers.

True

Conduction a base year analysis is a good choice for a faulty that has just completed a project that added nine new holes to the original 9-hole course.

True

Gross margin is what remains after calculating the difference between revenue and COGS.

True

Staff evaluations are a relevant data source for a SWOT analysis. (T / F)

True

The divisor in the linear trend formula-average percentage is the number of years being measured.

True

The results of a SWOT analysis could be sufficient justification for the abandonment of a core business function.

True

The utility of a business plan for managing day-to-day operations depends on the accuracy of your assumptions.

True

The utility of your business plan for managing day-to-day operations in a golf shop depends on your ability to manage internal factors.

True

Raising or lowering green fees is a reasonable response to an underperforming budget?

True "if rounds are not growing as projected, the management may have their strategy for increasing rounds through more efficient yield management."

The process for developing a business plan starts before you establish goals you would like to achieve for the shop's coming year.

True 1. Define the Business 2. Assess the Current State of the Business 3. Develop Goals/Objectives

Is it appropriate to address the role of the employee in the mission statement?

True A successful mission statement identifies key elements of the business such as image, quality of customer service and the critical role of employees.

In a cash budget, transactions are only recognized at the time they occur.

True Cash flow budgets show expenses when the money actually changes hands.

Revising forecasts and budgets is one way to keep a business solvent in the event of unforeseen external changes.

True In periods of extreme economic decline, many businesses scale back plans for growth and revise revenue projections in order to simply keep solvent.

The interpretation of quantitative data is less susceptible to differences of opinion than qualitative data.

True Quantitative data is usually based on numerical measures. What, How Much, How Often

Calculating yield involves knowing the relationship between the amount utilized and the amount available.

True number of rounds played in a period/potential rounds in a period x 100 = % of yield for a period.

Consider the following statement as part of a business plan: "Improve range profits and customer satisfaction." According to the business planning course, this statement is an example of an objective.

True and False True in that it specifically states an intention to be fulfilled. False in that: Not SMART Specific Meaningful Achievable Realistic Time oriented

The new manager of a ten-year-old private course, currently doing an average of 5,000 tournament rounds per year, proposes to increase tournament rounds by 50% by the end of next year. This proposal meets the criteria for an effective business objective as presented in the business planning course manual.

True in that it reaches the SMART level False in that an increase in tournament rounds by 50% may not be achievable. We weren't given enough historical data to know

What would be the most appropriate initial response to facility income not meeting projections?

Use all data to make an informed decision as to if the cause is internal or if the industry as a whole is "off."

What is the process called when the manager reviews total rounds played to determine who is playing and when?

Yield analysis