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A Primer on the Art of Finance

In the following chapter we’re going to plunge into the first of the three major financial statements. But before we do, we want to tell you a little more about that secret in accounting. We’ve already warned you that many of the numbers aren’t real in the same sense as your bank balance is real. Rather, they are based on estimates and assumptions—on the art of finance. In this chapter we want to help you understand what to look for.

If you’re like a lot of entrepreneurs, you may be a little mystified by the idea that finance is partly an art. Everything else in the business world—marketing, operations, managing people, and so on—is obviously subjective, a matter dependent on experience and judgment as well as ...

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