As you have learned this week, ratios by themselves do not provide much value unless they are compared to those of previous accounting periods. Also, ratios do not measure a companies "intellectual capital assets" when assessing a company's true worth. These may include the brand name, growth potential, human or intellectual capital, etc.

Consider the brand name for a moment. If you were in the market to purchase a franchised food operation, how much value would you put in its brand name? Sometimes referred to as Goodwill, purchasing a brand name business franchise can be up to 50% or even 60% of the total cost to purchase the business. As this is not anything tangible, can "brand name" offer a franchise that much value?

Couldn't you simply copy a franchised product line and open up under your own name? Support your thoughts on brand name worth by providing advantages and disadvantages of purchasing a "brand name" franchised operation.