| Title | Fundamentals of Corporate Finance |
| Author(s) | Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan |
| Publisher | McGraw-Hill Companies |
| Year | 2003 |
| Edition | 6th Standard Edition |
| Language | English |
| Pages | 892 |
| ISBN | 9780072469748 |
| Genre | Finance / Corporate Finance |
| Series | McGraw-Hill/Irwin Series in Finance, Insurance, and Real Estate |
| Size | 9.71 MB |
| Extension |
Summary
Fundamentals of Corporate Finance is a cornerstone textbook in business education, authored by three of the most respected scholars in financial economics: Stephen A. Ross, Randolph W. Westerfield, and Bradford D. Jordan. First published in the early 1990s and now in its sixth standard edition (2003), the book has been adopted by universities around the world and has shaped how generations of students understand the financial management of corporations. Its publisher, McGraw-Hill, positions it within the prestigious Irwin/McGraw-Hill Series in Finance, Insurance, and Real Estate, a collection known for rigorous yet accessible treatments of complex subjects. The book's enduring popularity stems from its ability to bridge theory and practice, presenting abstract financial concepts in ways that students can apply to real business decisions.
The sixth edition is organized around the central themes that define modern corporate finance. It begins with an overview of financial management and the financial environment, then moves into the core analytical tools: financial statements, taxes, and cash flow; working with financial statements; and the time value of money. From there, the text progresses to valuation of future cash flows, discounted cash flow valuation, and interest rates and bond valuation. Subsequent sections address stock valuation, net present value and other investment criteria, making capital investment decisions, and project analysis. The later chapters tackle risk and return, cost of capital, raising capital, financial leverage and capital structure policy, dividends and dividend policy, and short-term finance and planning. This comprehensive coverage ensures that students emerge with a working knowledge of every major decision area in corporate financial management .
What distinguishes Fundamentals of Corporate Finance from other textbooks is its pedagogical design. Each chapter opens with learning objectives and a real-world vignette that frames the material in a practical context. The authors integrate numerous examples, self-test problems, and end-of-chapter exercises that reinforce conceptual understanding. The text emphasizes intuition alongside quantitative rigor, explaining not just how to calculate a net present value or a weighted average cost of capital, but why these calculations matter and how they inform managerial decisions. The sixth edition, in particular, reflects the authors' commitment to updating the material with contemporary examples and refining the clarity of explanations based on feedback from instructors and students .
The book is primarily intended for undergraduate and MBA students taking introductory corporate finance courses. It assumes some familiarity with basic accounting and statistics but does not require advanced mathematics, making it accessible to students from a variety of academic backgrounds. Instructors appreciate the text's flexibility: it can be used in a one-semester survey course or a more intensive two-semester sequence, with chapters that can be selected or omitted according to the course's focus. The extensive ancillary package, including instructor manuals, test banks, and student study guides, further enhances its suitability for classroom adoption. For students, the book serves as both a learning tool and a lasting reference that they can consult throughout their careers.
It is worth noting that the edition described here is the sixth standard edition, published in 2003, and the book has since gone through many subsequent editions, with the thirteenth edition appearing in 2022 and a 2024 release also available [citation:2][citation:8]. While the core principles of corporate finance remain constant, later editions incorporate updated examples, revised tax code treatments, and new discussions of contemporary financial practices. Readers seeking the most current version should consult the latest edition, but the sixth edition remains a solid and comprehensive introduction to the field, particularly for those interested in understanding the foundational concepts that have made this textbook a standard in finance education.
Key Features
- The book provides comprehensive coverage of core corporate finance topics, from financial statement analysis and time value of money to capital budgeting, risk and return, and capital structure policy.
- Each chapter begins with clear learning objectives and a practical vignette that connects the upcoming material to real-world financial decisions.
- The text emphasizes intuition alongside calculation, explaining the reasoning behind financial models rather than presenting them as formulas to be memorized.
- End-of-chapter exercises, self-test problems, and worked examples give students ample opportunity to practice and verify their understanding.
- The sixth edition has been updated with contemporary examples and refined explanations based on instructor and student feedback.
- Authored by Stephen A. Ross, whose arbitrage pricing theory and agency theory reshaped financial economics, ensuring theoretical depth and authority [citation:4].
- Randolph Westerfield, former dean of USC's Marshall School of Business, brings expertise in corporate financial policy and investment management to the text .
- Bradford Jordan, a recipient of the Fama/DFA Prize and former department chair at the University of Kentucky, contributes practical insight into capital structure and security price behavior [citation:11].
- The book is part of the McGraw-Hill/Irwin Series in Finance, Insurance, and Real Estate, a collection recognized for academic rigor and pedagogical quality.
- Its flexibility allows instructors to adapt the material to one-semester or two-semester courses by selecting chapters that match their curriculum.
- The comprehensive ancillary package includes instructor manuals, test banks, and study guides, supporting both teaching and independent learning.
- With 892 pages, the sixth edition offers thorough treatment of every major area without becoming unwieldy for students encountering the subject for the first time.
About the Author
Stephen Alan Ross was born in Boston, Massachusetts, on February 3, 1944. He earned a bachelor's degree in physics from the California Institute of Technology and a Ph.D. in economics from Harvard University. Before joining the MIT Sloan School of Management faculty, he taught at the Wharton School of the University of Pennsylvania and at Yale University [citation:4]. Ross was a seminal theorist who worked for over three decades to reshape financial economics. He is best known for developing the arbitrage pricing theory, a foundational model in asset pricing, and he coined the term "agency theory" and pioneered the binomial model for pricing stock options. He published more than 100 articles on finance and economics and received numerous awards, including the Jean-Jacques Laffont Prize from the Toulouse School of Economics in 2007 and the Deutsche Bank Prize in Financial Economics in 2015. He died from sudden cardiac arrest on March 3, 2017, at the age of 73 [citation:4].
Randolph W. Westerfield is Dean Emeritus and the Charles B. Thornton Professor in Finance Emeritus at the University of Southern California's Marshall School of Business. He came to USC from the Wharton School, University of Pennsylvania, where he was chairman of the finance department and a member of the finance faculty for 20 years. His areas of expertise include corporate financial policy, investment management, and stock market price behavior. He has served on the board of trustees of Oaktree Capital mutual funds and has been a financial expert on the boards of several publicly traded companies [citation:5]. Bradford D. Jordan is a Visiting Scholar in the Warrington College of Business at the University of Florida. He previously held the duPont Endowed Chair in Banking and Financial Services at the University of Kentucky, where he was department chair for many years. He has published numerous articles in top journals on issues such as cost of capital, capital structure, and the behavior of security prices. He is a past president of the Southern Finance Association and a recipient of the Fama/DFA Prize in 2010 [citation:11]. Together, these three authors bring a combination of theoretical innovation, academic leadership, and practical expertise that has made Fundamentals of Corporate Finance one of the most trusted textbooks in the field.
Related Books
- Corporate Finance — Stephen A. Ross, Randolph W. Westerfield, Jeffrey F. Jaffe, and Bradford D. Jordan
- Essentials of Corporate Finance — Stephen A. Ross, Randolph W. Westerfield, and Bradford D. Jordan
- Corporate Finance: Core Principles and Applications — Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe, and Bradford D. Jordan
- Principles of Corporate Finance — Richard Brealey, Stewart Myers, and Franklin Allen
- Fundamentals of Investments: Valuation and Management — Bradford D. Jordan and Thomas Miller
- Financial Management: Theory & Practice — Eugene F. Brigham and Michael C. Ehrhardt
- Investment Analysis and Portfolio Management — Frank K. Reilly and Keith C. Brown
- Options, Futures, and Other Derivatives — John C. Hull
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FAQ
Q : What is the ISBN of the sixth standard edition of Fundamentals of Corporate Finance?
R : The sixth standard edition, published in 2003 by McGraw-Hill, carries ISBN 0072469749 (alk. paper), which corresponds to ISBN-13 9780072469748 [citation:1][citation:7]. International editions have separate ISBNs: 0071151036 for the international paperback and 0071227180 for another international edition [citation:1]. The edition described on this page is the standard edition with 892 pages, though some library records list 776 pages plus appendices.
Q : Is this book suitable for someone with no prior finance background?
R : The book is designed for undergraduate and MBA students taking introductory corporate finance courses. It assumes some familiarity with basic accounting and statistics but does not require advanced mathematics. The authors explain concepts from first principles, using numerous examples and self-test problems to build understanding gradually. For complete beginners, supplemental study guides or instructor guidance may be helpful, but the text itself is accessible to students encountering corporate finance for the first time.
Q : How does the sixth edition differ from later editions?
R : The sixth edition, published in 2003, covers the same core principles as later editions but lacks updates made in subsequent revisions. The book has since progressed through many editions, with the thirteenth edition appearing in 2022 and a 2024 release also available [citation:2][citation:8]. Later editions incorporate updated tax code treatments, contemporary examples, and revised discussions of financial practices. Readers seeking the most current material should consult the latest edition, but the sixth edition remains a solid introduction to foundational concepts.
Q : Who was Stephen A. Ross and why is he significant?
R : Stephen A. Ross (1944–2017) was a seminal financial economist best known for developing the arbitrage pricing theory, a foundational model in asset pricing. He also coined the term "agency theory" and pioneered the binomial model for pricing stock options. He taught at Wharton, Yale, and MIT Sloan, and received numerous awards including the Deutsche Bank Prize in Financial Economics in 2015. His work reshaped financial economics and his textbooks have educated generations of finance students [citation:4].
Q : Does this book cover both theory and practical applications?
R : Yes, the book is known for bridging theory and practice. It presents theoretical foundations such as the time value of money, risk and return models, and capital structure theory, but consistently illustrates these concepts with real-world examples and managerial decision contexts. Each chapter includes practical vignettes and problems that require students to apply what they have learned. The authors emphasize intuition alongside calculation, explaining why financial models matter and how they inform business decisions.
Q : What topics are covered in the later chapters of the book?
R : The later chapters address risk and return, cost of capital, raising capital, financial leverage and capital structure policy, dividends and dividend policy, and short-term finance and planning. These topics build on the foundational concepts introduced earlier in the book and prepare students to understand how corporations make financing and investment decisions in practice. The comprehensive coverage ensures that students emerge with a working knowledge of every major decision area in corporate financial management.
Q : Is this edition the instructor's edition or the student edition?
R : The ISBN listed on this page, 9780072469748, corresponds to the standard student edition of the sixth edition. The old article's description contained a complaint from a buyer who received an instructor's edition instead of the standard edition, but that complaint refers to a specific seller's listing, not to the edition itself. Readers purchasing this book should verify with the seller that they are receiving the standard edition if that is what they require.
Q : What ancillary materials are available for this textbook?
R : McGraw-Hill produces a comprehensive ancillary package for Fundamentals of Corporate Finance, including an instructor's manual, test bank, PowerPoint slides, and a student study guide. These materials are typically available to instructors who adopt the book for their courses, and study guides may be sold separately to students. The ancillaries enhance the book's suitability for classroom use by providing additional practice problems, teaching resources, and assessment tools.
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