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Book details
ISBN: 9780073382463 / 0073382469
Division: Higher Education
Pub Date: FEB-10
Pages: 672

Copyright: 2011
Edition: 7
Format: Hardback
Essentials of Corporate Finance

Stephen Ross, Randolph Westerfield, Bradford Jordan


About the book

Essentials of Corporate Finance, 7th edition by Ross, Westerfield, and Jordan is written to convey the most important concepts and principles of corporate finance at a level that is approachable for a wide audience. The authors retain their modern approach to finance, but have distilled the subject down to the essential topics in 18 chapters. They believe that understanding the 'why' is just as important, if not more so, than understanding the 'how,' especially in an introductory course. Three basic themes emerge as their central focus:

1. An emphasis on intuition'separate and explain the principles at work on a common sense, intuitive level before launching into specifics. Underlying ideas are discussed first in general terms, then followed by specific examples that illustrate in more concrete terms how a financial manager might proceed in a given situation.

2. A unified valuation approach'Net Present Value is treated as the basic concept underlying corporate finance. Every subject the authors cover is firmly rooted in valuation, and care is taken to explain how decisions have valuation effects.

3. A managerial focus'Students learn that financial management concerns management. The role of financial manager as decision maker is emphasized and they stress the need for managerial input and judgment.

Key features

  • McGraw-Hill's Connect Finance. Connect Finance offers a number of powerful tools and features to make managing assignments easier, so you can spend more time teaching. Students can engage with their coursework anytime and anywhere, making the learning process more accessible and efficient. In short, Connect Finance facilitates student learning and optimizes your time and energies, enabling you to focus on course content, teaching, and student learning.
    • Create and deliver online, auto-graded homework assignments, quizzes, and tests directly from the end-of-chapter materials or test bank. Problems are available as both static and algorithmic problems.
    • Students receive immediate, detailed feedback on their assignments, allowing them to focus on the areas where they need improvement.
    • A Self-Quiz and Study allows students to evaluate their performance through a practice test and then receive recommendations for specific readings from the text, supplemental study material, and practice work that will improve their mastery of each learning objective.
    • Pre-built assignments are available to save you set up time.
    • Questions mapped to AACSB skill areas, Bloom's Taxonomy levels, and difficulty level enable you to run reports that assess specific learning outcomes.

  • Connect Plus Finance. This packaging option combines all the great features of Connect Finance, along with access to an online version of Essentials of Corporate Finance, linked to additional study features, so that students can easily refer back to the text for review and guidance.
  • The latest research on dividend policy is reflected in Chapter 14, which has been significantly rewritten to include the life cycle theory and the impact of the 2003 dividend tax cut.
  • New international material on the stock market risk premium is now included in Chapter 10.
  • Every chapter has been evaluated and revised to provide the most up to date information and current examples. This provides relevance and interest for both students and instructors. Key content updates and additions include:
    • Updated corporate ethics box with Bank of America purchase of Merrill Lynch and new material on Microsoft/Yahoo! takeover battle (Chapter 1)
    • A new example comparing ratios for Lowe's and Home Depot and a new example comparing DuPont breakdowns for Yahoo! and Google (Chapter 3)
    • New opener on GE's 'Ecomagination' program (Chapter 8)
    • New opener on inventory periods in the auto industry (Chapter 16)
    • New opener on the US dollar/Canadian 'loonie' exchange rate (Chapter 18)

  • Incorporates a concept building approach to learning. Chapter sections are intentionally kept short to promote a step-by-step, building block approach to learning. Each section is followed by a series of short concept questions that highlight the key ideas just presented before moving on to new material. Also, the crucial topic of the time value of money is covered in two chapters, allowing for a patient, building block approach. This is a hallmark of the highly successful Ross, Westerfield, Jordan textbooks.
  • Learning Objectives, which provide a listing of essential topics at the beginning of each chapter, are identified throughout the chapter and the supplements. End of chapter problems are noted with the appropriate learning objective which correlates the problem to the chapter content.
  • Numbered Examples are extensively integrated into the chapters. These examples provide detailed applications and illustrations of the material in a step-by-step format. Each example is completely self-contained so that students don't have to search for additional information. These are valuable learning aids because they provide both detail and explanation.
  • Calculator Hints are provided in relevant chapters to help students learn or brush up on their financial calculator skills. There is an appendix (D) with instructions for using the HP-10B and TI BA II Plus Financial Calculators. Spreadsheet Strategies are also included to help students with their Excel spreadsheet skills. This feature appears in self-contained sections and shows students how to set up spreadsheets to analyze common financial problems'a vital part of every business student's education!
  • Numerous Internet features, including 'Work the Web' boxes that show students how to research financial issues using the web and how to use the information they find to make business decisions. Web Exercises are in the end of chapter materials, and require students to use the Internet to solve the problem. Web annotations, located in the margins within chapters, specifically accompany text material and provide students and instructors with a quick way to check for current and additional information using the Internet.
  • Chapter-Opening Vignettes with Functional Integration Links'each chapter begins with a recent real-world event to introduce students to the chapter concepts. Since many non-finance majors use this text, a brief paragraph linking the vignette and chapter concepts to majors in marketing, management, and accounting is included.
  • Mini-Cases are included at the end of each chapter. These cases focus on company situations that reflect important corporate finance topics. Each case presents a new scenario, data, and a dilemma. Several questions at the end of each case require students to synthesize the material they should have learned from the chapter.

  • About the author

    Bradford Jordan
    Bradford D. Jordan is Professor of Finance and Gatton Research Fellow in the Carol Martin Gatton College of Business and Economics at the University of Kentucky. He has a long-standing interest in both applied and theoretical issues in corporate finance, and has extensive experience teaching all levels of corporate finance and financial management policy. Professor Jordan has published numerous articles on issues such as cost of capital, capital structure, and the behavior of security prices.

    Randolph Westerfield
    Randoloph W. Westerfield is Dean of the Marshall School of Business at University of Southern California and holder of the Robert R. Dockson Dean's Chair of Business Administration. From 1988 to 1993, Professor Westerfield served as the chairman of the School's finance and business economics department and the Charles B. Thornton Professor of Finance. He came to USC from The Wharton School, University of Pennsylvania, where he was the chairman of the finance department and member of the finance faculty for 20 years. His areas of expertise include corporate financial policy, investment management and analysis, mergers and acquisitions, and stock market price behavior. Professor Westerfield has served as a member of the Continental Bank trust committee, supervising all activities of the trust department. He has been consultant to a number of corporations, including AT&T, Mobil Oil and Pacific Enterprises, as well as to the United Nations, the U.S. Department of Justice and Labor, and the State of California.

    Stephen Ross
    Stephen Ross is presently the Franco Modigliani Professor of Finance and Economics at the Sloan School of Management, Massachusetts Institute of Technology. One of the most widely published authors in finance and economics, Professor Ross is recognized for his work in developing the Arbitrage Pricing Theory and his substantial contributions to the discipline through his research in signaling, agency theory, option pricing, and the theory of the term structure of interest rates, among other topics. A past president of the American Finance Association, he currently serves as an associate editor of several academic and practitioner journals. He is a trustee of CalTech, a director of the College Retirement Equity Fund (CREF), and Freddie Mac. He is also the co-chairman of Roll and Ross Asset Management Corporation.

    Table of contents

    Part I. Overview of Financial Management
    Ch. 1 Introduction to Financial Management
    Part 2. Understanding Financial Statements and Cash Flow
    Ch. 2 Financial Statements, Taxes, and Cash Flow
    Ch. 3 Working with Financial Statements
    Part 3. Valuation of Future Cash Flows
    Ch. 4 Introduction to Valuation: The Time Value of Money
    Ch. 5 Discounted Cash Flow Valuation
    Part 4. Valuing Stocks and Bonds
    Ch. 6 Interest Rates and Bond Valuation
    Ch. 7 Equity Markets and Stock Valuation
    Part 5. Capital Budgeting
    Ch. 8 Net Present Value and Other Investment Criteria
    Ch. 9 Making Capital Investment Decisions
    Part 6. Risk and Return
    Ch. 10 Some Lessons from Capital Market History
    Ch. 11 Risk and Return
    Part 7. Long-Term Financing
    Ch. 12 Cost of Capital
    Ch. 13 Leverage and Capital Structure
    Ch. 14 Dividends and Dividend Policy
    Ch. 15 Raising Capital
    Part 8. Short-Term Financial Management
    Ch. 16 Short-Term Financial Planning
    Ch. 17 Working Capital Management
    Part 9. Topics in Business Finance
    Ch. 18 International Aspects of Financial Management
    Appendix A. Mathematical Tables
    Appendix B. Key Equations
    Appendix C. Answers to Selected End-of-Chapter Problems
    Appendix D. Using the HP-10B and TI BA II Plus Financial Calculators



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