Assume You Are the Marketing Manager for a Leading Canadian

question 93

Essay

Assume you are the marketing manager for a leading Canadian manufacturer of earth-moving equipment. Your company would like to become heavily involved in global marketing (especially in India) but has some capital limitations. Your job is to evaluate whether it should use contract manufacturing or direct investment. Compare and contrast these two options and make a recommendation.

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Definitions:

Return on Common Stockholders' Equity

A measure of financial performance that indicates how much profit a company generates with the money shareholders have invested, specifically for common shares.

Preferred Dividends

Dividends that are paid to preferred shareholders before any are distributed to common shareholders.

Earnings per Share

A measure of a company's profitability that indicates how much money shareholders would receive for each share owned, calculated by dividing net income by the number of outstanding shares.

Interest Expense

The cost incurred by an entity for borrowed funds, reflected as a charge in the income statement.