Introductory finance courses have changed over the years, and the number of prerequisite subjects has been reduced to the point that a large number of students are studying finance with little or no business background or knowledge of accounting and/or economics. Further, many of these students will not undertake any further finance courses. As a consequence, these courses need a special type of finance text—one which provides students with a broad coverage of the essential topics in a way that allows for their minimal preparation while still providing an introduction for the intended finance majors.
A review of the burgeoning number of finance texts that have been prepared for the Australian and New Zealand markets confirmed our expectations that a satisfactory text did not exist in the local market to meet the special needs of these introductory finance courses. However, Ross, Westerfield and Jordan’s Essentials of Corporate Finance, a successful American textbook which has been developed through seven editions, stood out for this particular segment. A key to its success is the use of stories based on real-world experiences, rather than a description of the theory, to develop the important finance concepts. In addition, its chatty writing style is much appreciated by students, particularly those with little preparation and/or those for whom English is a second language.
However, this textbook did not provide an ideal solution for those teaching or studying an introductory finance course in Australia and New Zealand. While a large amount of finance theory is generic, the institutional environment and terminology used across countries is not. The solution was apparent: a local adaptation of the text while being careful to ensure not to depart from its winning ways.
The fruits of our labour are to be found in this text which maintains the well-recognised Ross et al. formula while using local terminology and explaining everything within an Australian and New Zealand setting. The Ross tradition of using real-world examples of either Australian or well-recognised international companies has also been incorporated. The subject of finance is distilled down to its bare ‘essentials’ while retaining a modern approach.
The book is arranged in nine parts to enable a flexible approach to the subject material, thereby allowing subject coordinators to decide the particular sequence. Each chapter begins with an overview of the chapter’s content and concludes with material which is an extension of the earlier material. In the event of insufficient time, the latter may be omitted without affecting a basic coverage of the essential material. At the end of each chapter is a large selection of practical and theoretical problems of varying degrees of difficulty for students to solve. In addition, each major section concludes with a mini-case that introduces a practical application of the material covered.
Perhaps the most challenging aspect of writing this adaptation has been the incorporation of the Australian and the New Zealand imputation tax system. As the theoretical development of finance has largely been undertaken within the framework of a classical tax system, we chose to commence our discussion within this environment and then extend the discussion to incorporate an imputation tax system. Our approach to imputation has been to treat it at a basic level and not overly complicate the issue for students.
We feel that we have successfully achieved our goal of producing a text that conveys the most important concepts and principles of finance at a level that is approachable for the widest possible audience in a package that realistically can be covered in a single term.