Failing to understand the difference between profitability and cash flow is a prime cause of bankruptcy. You will almost certainly experience virtual bankruptcy first-hand in Part 2, so let me offer you some light relief as an antidote to your forthcoming mortification.

I wrote the following fantasy for Chief Executive magazine in September 1991, at a time when leveraged management buy-outs had bequeathed the legacy of an unsustainable debt burden on newly spun-out companies. In a way that foreshadowed the dot.com bankruptcies ten years later and also the recent ‘credit crunch’, vague forecasts of profit rather than solid achievements of cash were felt to be king. But I must emphasise that this chapter is presented for your entertainment rather than your education: you can ignore it without peril.

Dramatis Personae

Prince Machiavelli, a Florentine business tycoon hell-bent on expansion.

Luca Pacioli, inventor of double-entry book-keeping and financial adviser to the Prince.

Leonardo da Vinci, amateur inventor and occasional artist.