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Video Game Industry-Interest Rate

In: Business and Management

Submitted By msv138
Words 299
Pages 2
Interest rate
For many decades, the Canadian dollar has been lower compare to the United States. This has its advantages and disadvantages for the video game industry in both countries. An advantage for the Canadian video game industry it is a disadvantage for US video game industry. Therefore, advantage for US video game is a disadvantage for Canadian Video game industry. For instances an advantage for Canada video game industry, the industry will experience a tremendous high inflow of American customers buying Canadian video games; meaning Canadian video game is constantly selling their products. Therefore, Canadian companies are doing better because in order for a company to be better off; the company’s accounts receivable and inventory turnover ratio must be higher and days to sell must be lower. This is a disadvantage for US because their dollar is worth more, but Canada is getting high inflow of tourist from US because of higher US exchange rate, as a result those tourists expend lots of revenue on Canadian goods and services. Since Canada is one of the biggest exporters in the world, an advantage for the US is that, the exports sales converts into larger amount in Canadian dollars (which is a disadvantage for Canada); meaning US production cost is lower in Canadian dollars. The Exchange rate changes all the time, an increase in Canadian dollar may also have its advantages and disadvantages for companies in general in Canada “As part of a globalized industry, a given Canadian publisher or developer may see both negative and positive impacts from a given exchange rate shift. For example, while US bound exports may be hurt by a strengthening Canadian dollar, components developed in the US on behalf of the Canadian firm will become less expensive.” (SECOR Consulting Inc. P.28. 2011)

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